Buy-to-Let UK 2026: Is It Still Worth It?
A typical leveraged BTL in 2026 pays its higher-rate owner roughly -£2,750 a year after Section 24. The property has to appreciate just to break even on the income side.
Higher-rate landlord: BTL income before vs after Section 24
| Line | Pre-2017 rules | 2026/27 rules |
|---|---|---|
| Annual rent | £15,000 | £15,000 |
| Mortgage interest | £8,000 | £8,000 |
| Taxable income | £7,000 | £15,000 |
| Tax at 40% | £2,800 | £6,000 |
| Less 20% interest credit | n/a | -£1,600 |
| Net tax | £2,800 | £4,400 |
Same property, same income. Section 24 adds £1,600 of tax for a higher-rate landlord.
Key takeaways
Section 24 (introduced 2017-2020) replaced full mortgage interest deduction with a 20% tax credit, devastating after-tax yields for higher-rate landlords
A typical leveraged BTL today returns 4-6% per year after costs and tax, compared to ~7-9% historical real returns from a global equity tracker
Stamp duty surcharge of 5% applies on second homes from April 2025, on top of standard SDLT
BTL still works in specific niches (low-tax landlords, HMOs, full-cash purchases) but has lost the broad mass-market appeal it had pre-2017