Is buy to let still a good investment in 2026?

If you have been wondering whether buy to let is still a good investment, you are not alone. The question of whether is buy to let still a good investment in 2026 depends heavily on tax structure, mortgage rates, and deposit size.

This is one of the most common enquiries at Regulated Advice, however, financial advisors cannot provide direct advice on property investments. They cover regulated investments such as funds, stocks, ISAs and pensions.

Buy to let falls outside that remit. What they can do is help you understand the broader financial picture so you can make a well informed decision yourself.

The buy to let world looks very different today compared to a decade ago. Section 24, introduced gradually from 2017, removed landlords' ability to deduct mortgage interest from rental income before calculating tax.

Then the October 2024 budget added more problems for the buy to let investor. Stamp duty on additional properties jumped from 3% to 5% and the capital gains tax allowance dropped from £12,300 to just £3,000.

Many would be landlords simply walked away.

Section 24

Understanding whether is buy to let still a good investment requires looking closely at Section 24. Section 24 changed the tax rules for landlords gradually from 2017, with the full impact hitting in April 2020. Before that, landlords knocked their mortgage interest off their rental income before working out what tax they owed.

That one rule made buy to let work for a huge number of people. Now, landlords get a flat 20% tax credit on mortgage interest and nothing more. It does not matter whether you pay tax at 40% or 45%.

The credit stays the same. For higher rate taxpayers, this single change wiped out returns that had looked solid just a few years earlier.

Throw rising mortgage rates on top and the numbers became very uncomfortable indeed. The only way around it is to own properties through a limited company, which can write off mortgage interest as a business cost.

That left landlords with a stark choice: take the hit, sell up, or restructure.

How landlords are responding to changes in buy to let investment

The tax changes have prompted a clear shift in landlord behaviour. Approximately 300,000 landlords left the private rental sector between 2017 and 2023 following the introduction of Section 24. New buy to let mortgage completions dropped by 22% in 2024 compared to 2022 levels.

In 2016, fewer than 20% of new buy to let mortgages went through limited companies. By 2025, that figure had risen to over 56%.

Companies can still deduct mortgage interest as a business expense, unlike personal landlords who lost that deduction under Section 24.

A survey by the National Residential Landlords Association found that 33% of existing landlords plan to reduce their portfolios over the next two years. Only 8% plan to expand. For many, the numbers simply do not add up.

Why the old approach no longer works

Back in 2021, a landlord could secure a mortgage at around 2.5% and rent out a property generating a 5% yield. The maths was simple and the profits were comfortable.

Today, buy to let mortgage rates typically range from 5.5% to 7%. That same property now needs to work considerably harder. Section 24 also changed how mortgage interest relief works.

Previously, landlords deducted mortgage interest from rental income before calculating tax.

The government had several reasons for these changes. They wanted to help first time buyers compete fairly. They also worried about landlords carrying too much debt.

The old system also favoured higher earners.

Case study: Is buy to let still a good investment? Four scenarios

This case study compares four different ownership structures for the same property and shows how tax and mortgage treatment changes the outcome.

Age 60 & husband age 54. They have £179,000 in savings, she has £80,000 in frozen DC schemes with Standard Life and Utmost and they have a rental property worth £200,000 with no mortgage and rental income of £850 per month. They would like a full financial review of their savings, pensions and retirement planning and advice on how to maximise their savings and income in the most tax efficient way.

Scenario setup

£200k property · £850/month rent · higher rate taxpayer · £1,500/year expenses · 40% deposit (£80k) · £120k mortgage @ 5.5% (6% ltd co)

Key assumptions

	Mortgage paid off	Buying today — old rules	Buying today — Section 24	Limited company
Gross rent	£10,200	£10,200	£10,200	£10,200
Mortgage interest	£0	−£6,600	−£6,600	−£7,200
Expenses	−£1,500	−£1,500	−£1,500	−£1,500
Accountancy costs	—	—	—	−£1,500
Taxable profit	£8,700	£2,100	£8,700*	£0
Tax	−£3,480	−£840	−£2,160†	£0
Mortgage payments (total)	£0	−£8,832	−£8,832	−£8,832
Cash in hand	+£5,220	−£472	−£2,792	+£168

Outcome analysis

* Under Section 24, mortgage interest cannot be deducted from profit. Taxable profit is calculated on gross rent minus expenses only.

† Tax at 40% on £8,700 = £3,480, less a flat 20% tax credit on £6,600 mortgage interest (£1,320). Net tax bill = £2,160.

‡ Limited company taxable profit is £0 after all deductions. No corporation tax due. Losses can be carried forward.

What this shows

Is buy to let still a good investment with a small deposit?

The size of your deposit now plays a crucial role in profitability. Borrowing less means paying less interest and achieving better cash flow. Putting down 40% instead of 25% deposit can transform a loss making property into a profitable one.

Many mainstream lenders now expect deposits of 20% to 25% as a minimum for buy to let mortgages.

For those asking whether buy to let is still a good investment, the deposit you bring to the table may be the most important number of all.

Is buy to let still a good investment through a limited company?

Buying through a limited company has become the only option for many landlords. The maths is simple. 

Companies still get full mortgage interest relief as a business expense, and personal landlords do not. Corporation tax at 19% is also a lot kinder than paying income tax at 40% or 45%.

It is not without drawbacks. Mortgage rates through limited companies tend to run 0.5% to 1% higher. Moving existing properties into a company also triggers stamp duty.

It is not a fix for everyone, but for anyone starting fresh it is worth running the numbers carefully.

Is buy to let still a good investment: the verdict for 2026

The blunt answer is this. If you are buying with a typical deposit and holding the property in your name, the numbers are incredibly difficult to make work. 

Even in the highest yielding locations in the country, the figures are really difficult to make work. With a larger deposit, however, the picture improves.

And with no mortgage at all, buy to let can still make sound financial sense. The size of your deposit and the location you choose are now the two biggest factors in whether this works for you.

Through a limited company, however, even a mortgaged property can work. Mortgage interest goes back on as a business expense, corporation tax is lower than income tax, and the numbers start to look very different. 

For anyone buying with a mortgage today, the limited company route is not a nice to have. It is pretty much the only viable option.

The English Private Landlord Survey shows landlords carry higher than average overall income. The median total gross annual income is £52,000, and one in five earns £100,000 or more.

However, most of these landlords have been in the game for years. They built up significant equity long before Section 24, the stamp duty surcharge, and mortgage rates doubling.

Crucially, that equity gave them the financial headroom to switch their properties into a limited company structure.

Starting cold today, with a modest deposit, is a completely different proposition. Anyone comparing their returns to an established landlord is not comparing like for like.