Around one in three Britons still hope to own a buy-to-let property, according to recent research, despite rising taxes, stricter regulations, and ongoing concerns that the market is in decline.
The survey, carried out by lender Market Financial Solutions, highlights that the strongest interest in becoming a landlord is found among younger adults. Over half of respondents aged 18 to 34 expressed a desire to invest in a buy-to-let property at some point in the future.
In comparison, only 14 per cent of those aged 55 and above said they were looking to become landlords. This lower figure may be influenced by the fact that many in the older age group are already property investors, rather than reflecting a lack of interest.
There’s also a possibility that younger individuals, particularly those just starting out financially, may not have fully weighed up the practicalities and challenges of letting property. Managing tenants, keeping up with regulations, and covering unexpected costs can be demanding.
Nevertheless, the findings indicate that the appeal of property investment hasn’t disappeared altogether. Even with recent changes that have made buy-to-let less lucrative for some, many still view it as a viable long-term investment option.
The enduring interest among the younger generation could also be tied to broader economic factors. With limited pension options and concerns about long-term financial security, property may still be seen as a relatively safe asset.
Moreover, despite government efforts to cool the market and rebalance tenant-landlord dynamics, the UK’s ongoing housing shortage continues to create strong demand for rental properties.
While returns may not be as generous as they once were, some investors believe that with careful planning and property selection, buy-to-let can still offer reasonable yields and capital growth.
Others point to the possibility of leveraging a mortgage to invest in property as a unique opportunity that isn’t as accessible in other asset classes, especially for younger investors.
At the same time, it’s important to acknowledge the risks. Regulatory burdens have increased in recent years, and there’s growing pressure for landlords to meet environmental standards and tenant protections.
The rise in interest rates has also impacted affordability, not only for buyers looking to enter the market, but for existing landlords facing remortgaging challenges.
Despite these hurdles, the desire to build wealth through property investment remains firmly in place for many – especially among younger demographics.
Ultimately, while buy-to-let may not be as simple or as rewarding as it once was, it continues to attract attention from those seeking to secure their financial future through bricks and mortar.
For those seriously considering it, getting sound advice, doing thorough research, and planning for the long term will be key to success in today’s market.
Paresh Raja, CEO of Market Financial Solutions, says talk of buy-to-let being in decline may be overblown. Despite recent challenges, many people still see property as a worthwhile investment.
He noted that while rising house prices, interest rates, and tougher regulations have made things harder for landlords, these haven’t stopped people from wanting to invest.
Raja said the survey highlights the UK’s ongoing interest in property, even as the market shifts. He believes falling mortgage rates could help boost buy-to-let interest again.
Though it’s not as easy as it once was, property remains a popular way to build long-term wealth.
Is buy-to-let still a solid bet?
Buy-to-let has long been a popular way for Britons to build wealth or supplement their retirement income. But in recent years, the appeal of property investment has come under increasing pressure.
Since 2016, landlords have faced a wave of higher taxes and stricter regulations. The Government’s addition of a 2% stamp duty surcharge in October—on top of the existing 3%—has made buy-to-let significantly more expensive.
Meanwhile, the Renters’ Rights Bill is expected to pass later this year. It will abolish ‘no-fault’ evictions under section 21, limit rent increases to once per year, and ban rental bidding among other reforms.
These changes have taken a toll. Data from Hamptons shows a net loss of around 300,000 rental homes in the last nine years, as more landlords exit the market than enter it.
Yet despite the headwinds, buy-to-let still holds strong appeal for many. Investors remain confident that property values rise over time, while rental income can offer steady returns.
A survey by Market Financial Solutions found that just over half of respondents agreed that real estate is a safe and stable investment.
In fact, three out of five adults said they believe property is a good way to build long-term wealth. Around 37% also said they’d rather invest in property than in stocks or shares.
For some, buy-to-let continues to serve as a long-term pension strategy—building a portfolio during their working years, then using the rental income in retirement.
Although the investment case isn’t as strong as it once was, many still see property as a reliable asset—especially in the face of rising rents and a chronic housing shortage.
How much do landlords make when they sell?
In 2024, the average landlord in England and Wales made a profit of around £103,640 when selling a property, based on research by Hamptons. This translates to a return of about 70 per cent, typically earned over a period of 11 to 12 years.
Of course, the return on a buy-to-let investment will vary depending on the location and the initial value of the property. For example, a landlord who purchased an average home in London back in 2009 would have seen their property’s value more than double by now, according to Land Registry figures.
On the other hand, those investing in places like Middlesbrough would have seen more modest gains. Since 2009, property prices there have increased by just 23 per cent on average, with much of that growth only occurring in the last few years.
Looking ahead, it’s difficult to predict with certainty how property prices will move across the UK. However, current trends suggest that the Midlands and northern regions are seeing stronger growth compared to the South.
Savills forecasts that UK house prices could rise by 23.4 per cent by 2029. This would mean that a property currently worth £300,000 might be valued at around £370,000 in just five years’ time.
Despite this, one of the main challenges with buy-to-let remains the high costs associated with buying and selling. Landlords face steeper charges than standard buyers, starting with a 5 per cent stamp duty surcharge.
For example, purchasing a £300,000 buy-to-let would incur a stamp duty bill of £20,000—considerably more than for a residential buyer. Additional costs can include legal fees of around £2,500 and a property survey, which may cost between £300 and £1,500 depending on the home.
Many landlords also face initial costs for furnishing the property, finding tenants via letting agents, and arranging safety certificates from gas and electrical engineers. All these expenses can push the real cost of the investment up to £325,000 or more.
When it comes time to sell, landlords will typically pay around 1.5 per cent of the sale price in estate agent fees, plus conveyancing costs for the transaction.
More significantly, any profit from the sale is subject to capital gains tax. Landlords will owe 24 per cent on the gains, although they can deduct expenses related to both the purchase and the sale.
Even with deductions, this tax can still be substantial, especially for properties that have seen large increases in value over the years.
While buy-to-let can be profitable in the long term, it’s essential for investors to factor in all the upfront and exit costs before deciding to enter the market.
How much do landlords make from rent?
Buy-to-let properties are currently delivering their strongest returns in over a decade, according to new figures from Paragon Bank.
The data revealed that, as of April 2025, the average gross rental yield for landlords stands at 7.11 per cent. This marks the highest level since February 2011.
To put that into perspective, a landlord purchasing a buy-to-let property for £200,000 could expect to earn approximately £14,220 in rental income annually—before tax and running costs are taken into account.
This return is significantly higher than the interest earned from most top-paying savings accounts, which are currently offering rates below 5 per cent before tax is applied.
Amid recent economic uncertainty and volatility in global markets, particularly surrounding new tariff threats from former President Trump, many investors may now see buy-to-let as a more appealing alternative to the stock market.
Russell Anderson, commercial director of mortgages at Paragon Bank, commented on the findings. He noted that despite the wider business community feeling the pressure from political and economic instability, the buy-to-let sector is still delivering solid, tangible returns.
He added, “While the most recent economic instability caused by the threat of Trump’s tariffs is understandably impacting business confidence across many sectors, these figures offer tangible evidence that buy-to-let continues to offer strong returns for investors.”
Mortgages can amp up investor returns
Taking out a mortgage to fund a buy-to-let investment certainly comes with its own risks—chief among them the possibility of repossession if repayments can’t be met. However, for landlords, the upside can be substantial.
One of the major advantages is that any rise in property value benefits the investor alone, even if the majority of the purchase was funded by the lender. The gains aren’t split with the bank, which makes leveraging through a mortgage especially powerful.
This dynamic allows investors to amplify their returns more than in many other types of investments. For example, someone might invest £100,000 towards a £300,000 property, covering the rest with a mortgage.
If the property’s value rises by 50 per cent over a decade, it becomes worth £450,000. In that case, their initial £100,000 has turned into a gain of £150,000—an overall return of 150 per cent on their original capital.
Of course, property values can fall, and that same leverage can work against investors in a downturn. Still, in a market where long-term growth is often expected, the benefit of using a mortgage is hard to ignore.
It’s worth remembering, though, that mortgage repayments must be made throughout ownership. Most landlords opt for interest-only buy-to-let mortgages, which keeps monthly payments lower and usually ensures rental income covers the cost.
At the end of the term, the property is sold, and the original loan is repaid from the sale proceeds, hopefully leaving the investor with a sizeable profit.
While it may be premature to declare a full buy-to-let revival, signs of renewed confidence in the market are emerging. Falling mortgage rates and rising rents have contributed to this cautious optimism.
According to Jonathan Hopper, chief executive of Garrington Property Finders, the outlook for the sector has started to brighten. He notes that many landlords sold up over the past year, which brought highly rentable properties back onto the market—providing opportunities for others to invest at favourable prices.
Hopper also highlights that falling interest rates are benefiting buy-to-let investors in two key ways: they make mortgages more affordable, and they reduce the returns on savings accounts, prompting some to consider alternative options.
As he puts it, more investors are now asking how they can make their money work harder. With rental yields improving, buy-to-let is becoming an increasingly attractive option for those looking to boost long-term returns.
Most landlords use a company to cut tax bills
Holding property in a limited company, rather than in your personal name – a process often referred to as ‘incorporating’ – is becoming an increasingly popular strategy among landlords looking to boost their buy-to-let returns.
According to data from Hamptons, a record-breaking 61,517 new buy-to-let limited companies were established in 2024. This marked a 23 per cent increase on the previous record set just a year earlier in 2023.
The trend is being driven largely by the tax advantages that come with owning buy-to-let properties through a company rather than as an individual.
For starters, profits made within a limited company are subject to corporation tax, which is generally lower than the income tax rates faced by private landlords.
This allows landlords to retain more profit within the company and potentially reinvest it into additional properties sooner than they might be able to if operating in their personal capacity.
One of the biggest tax benefits is the ability to offset the entire mortgage interest against rental income when the property is held in a company.
In contrast, landlords who own property personally can only claim tax relief on 20 per cent of their mortgage interest, regardless of their personal income tax rate.
This change hit higher-rate taxpayers particularly hard. Before 2016, they could claim relief on their mortgage interest at 40 per cent, but that benefit has now been removed.
To illustrate the difference: a higher-rate taxpayer paying £500 a month in mortgage interest on a property rented out for £1,000 a month is now taxed on the full rental income, with just a 20 per cent relief on the mortgage cost.
Meanwhile, a landlord holding the same property in a limited company would only be taxed on the remaining £500 profit after interest has been deducted.
In effect, landlords who operate through a company are taxed on their profit, while individual landlords are taxed more heavily – almost as if it were based on turnover.
As a result, Hamptons estimates that around 70 to 75 per cent of new buy-to-let purchases are now made through limited company structures. This proportion has continued to rise in recent years.
That said, this approach may not suit everyone. Lower-rate taxpayers, especially those with small or no mortgages, could find they are better off keeping their buy-to-let in their personal name.
There are also additional administrative responsibilities when using a company structure. Directors must be appointed, company accounts must be prepared and submitted, and records kept in order.
For landlords who choose this route, these requirements may result in higher costs if they need to hire an accountant or professional adviser.
Additionally, mortgage rates for limited companies tend to be more expensive than standard buy-to-let mortgages. This often includes higher arrangement fees and slightly less favourable interest rates.
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