Key figures (as of October 2026)
| Figure | Latest | Source |
|---|---|---|
| UK average private rent | £1,400 a month, +3.8% in the year | ONS, August 2026 |
| Rent growth by region | North East and North West 5.8%; London 3.5%; South East 3.0% | ONS, August 2026 |
| UK average house price | £273,000, +1.4% in the year | ONS, July 2026 |
| Bank Rate | 3.75% | Bank of England, 17 September 2026 |
| Stamp duty on additional homes | 5% surcharge on top of standard rates | GOV.UK |
| Section 21 evictions | Abolished in England from 1 May 2026 | Lightfoots solicitors |
| Property income tax rates | 22% / 42% / 47% from April 2027; finance cost relief at 22% | GOV.UK |
Nationally, rents are rising faster than house prices, and the gap between regions is wide.
What "good" should mean
A buy-to-let return has two parts: rent after costs, and any change in the property's value. Many arguments about whether it's still worth it compare an income-led investor with a growth-led one. Decide which you are first, because the right property, area and numbers differ for each.
What has changed in 2026
- Tax. Individuals pay income tax on rental profit at 20%, 40% or 45%. Mortgage interest is relieved as a 20% credit, not deducted from profit (Section 24). From April 2027, separate property rates of 22%, 42% and 47% apply, with finance cost relief at 22%. How you hold a property changes the result, and that's a question for your accountant.
- Buying costs. Buying an additional home adds a 5% stamp duty surcharge on top of the standard rates. Below £125,000 the standard rate is 0%, so the surcharge is the whole bill.
- Regulation. Since 1 May 2026, landlords can't use Section 21. Tenancies are assured periodic with no fixed term, and possession is through Section 8 grounds. You can't rely on a fixed term to guarantee income.
- Rates. Bank Rate is 3.75%. If you borrow, test whether the property still works if your costs rise.
How do you judge any buy-to-let?
Ten checks before you buy:
- Is the price right? Look for named comparable sales, not an estimate.
- Is it the right area? Check local employers, what similar homes let for, and the specific street, not just the town.
- Is the demand durable? Who rents this type of home, and how quickly does it let?
- Is it ready, or does it need work? Any works cost goes into the initial investment, along with the time it takes.
- Will there be a void, and what will it cost? Each month empty costs rent plus council tax and utilities, and finding a tenant may cost a letting fee. Count all of it up front.
- Is management in place? Who runs it, what it costs, and what's included.
- Have all costs been counted? Stamp duty, legal fees, works, void, letting, management, insurance, compliance, maintenance, plus any service charge or ground rent if it's leasehold.
- Does it work when things go against you? Stress-test an empty spell, a higher mortgage rate, a repair, and rent that doesn't rise.
- What's your tax position, and how will you hold it? Ask your accountant.
- What's your risk tolerance? How much could you lose and still be comfortable, how long can you hold, and how large is your cash reserve?
Build everything into the initial investment
Total investment = purchase price + stamp duty + legal and acquisition costs + any fees + works needed + expected void (months empty × lost rent and bills) + letting costs. Keep a cash reserve alongside it, held separately.
A worked example: one real deal, line by line
To show the method, here is one real deal from the North East, a two-bedroom mid-terrace. It had its works done and a tenant in place, so works, void and letting costs are all £0. On a vacant property that needs work, those lines would be added to the total, which would lower its net yield on total investment.
What you pay
| Item | Amount |
|---|---|
| Purchase price | £62,000 |
| Stamp duty (5% surcharge) | £3,100 |
| Legal fees, searches and acquisition costs | £1,965 |
| Total investment | £67,065 |
What comes in and goes out each year
| Item | Per year |
|---|---|
| Rent (£525 a month) | £6,300 |
| Letting and management (10%) | −£630 |
| Landlord insurance | −£150 |
| Safety certificates and compliance | −£100 |
| Maintenance allowance | −£454 |
| Net income before tax | £4,966 (£414 a month) |
Three yields from the same deal
| Basis | Yield |
|---|---|
| Gross, on purchase price | |
| Net, on price only (the figure agents often quote) | |
| Net, on total investment (the one that reflects what you put in) |
Gross yield ignores running costs. Dividing by the price alone ignores stamp duty and legal costs. Only the last line reflects the money you've actually put in.
Stress test. There's no void allowance because a tenant is in place. Each month empty would cost £525 in rent alone, before council tax and utilities. A three-week empty spell cuts net income to about £4,603 and net yield to about 6.9%. Over five years, with rent held flat, no voids and before tax, rent alone adds up to £24,830, or 37% of the money invested. That assumes no major repairs: a roof or boiler comes from your cash reserve, not the maintenance allowance.
Tax illustration. This is an illustration only, not tax advice. It assumes a cash purchase, treats all £4,966 as taxable profit, and ignores other income, allowances and the exact tax bands.
| Basic rate (20%) | Higher rate (40%) | Basic (22%, April 2027) | Higher (42%, April 2027) | |
|---|---|---|---|---|
| Tax on £4,966 | £993 | £1,986 | £1,093 | £2,086 |
| Income after tax | £3,973 | £2,980 | £3,873 | £2,880 |
| Net yield after tax | 5.9% | 4.4% | 5.8% | 4.3% |
The same deal is a 7.4% net yield before tax and between 4.3% and 5.9% after it. Borrowing would change these figures in both directions.
Was the price right?
The property was bought at £62,000. A house on the same street sold for £81,999 in August 2025, and a two-bedroom nearby sold for £83,999 in March 2026. That puts the price about 24% to 26% below the closest sales. Against the average for terraced houses across the postcode (£96,499, Rightmove), it's 36%.
The closer comparison is the more reliable one. A comparable sale isn't a formal RICS valuation, and a mortgage lender's own valuation decides how much you can borrow. The discount is equity on paper: you realise it on sale or refinance, not on completion.
Different kinds of buy-to-let compared
These are general tendencies, not rules.
| Approach | Income or growth | Capital needed | Management effort | Main risk |
|---|---|---|---|---|
| Higher-priced homes in high-demand areas (e.g. London, the South East) | Growth-led, lower yields | Larger deposit and costs | Moderate | Depends on price growth; sensitive to rates |
| Lower-priced homes in regional markets | Income-led, higher yield on cost | Less per property | Depends on condition and local demand | Concentrated in one local market; condition and voids |
| Homes bought to refurbish, then refinance | Value added through the works | More capital and time upfront | High | Cost overruns; valuation at refinance |
| Houses in multiple occupation (HMOs) | Higher gross rent per property | Moderate to high | High | Licensing, turnover and voids across rooms |
| Fully refurbished and already tenanted | Income from day one | Price includes the works | Low if managed | Less scope to add value yourself |
No approach wins on every measure. The right one depends on how much you can invest, how hands-on you want to be, and how much risk you can carry.
How we approach it at Akoya
We sell fully refurbished, tenanted terraced homes in County Durham to investors who live elsewhere, so weigh our view accordingly. Here's why we focus on that, and not on something else:
- Income from day one. A tenant is already in place, so there's no void to bridge and no letting fee.
- No works to fund. The refurbishment is done to the Durham Decent Homes Standard, with an EPC of C, so the cost is in the price and not left for you to find.
- Managed end to end. Most of our investors will never visit the property, so management is part of what they buy.
- A smaller amount per property. That makes it more accessible for investors building up gradually.
What you give up: less exposure to price growth than prime markets, concentration in a single local market, and older housing stock. A 1900s terrace needs ordinary ongoing maintenance like any period property.
If you'd like us to run your own numbers, talk to us about investing or see the current buy-to-let stock.
Common questions
What's the difference between gross and net yield? Gross yield is annual rent divided by the price. Net yield deducts running costs and, if you divide by total investment, includes stamp duty, legal costs and fees. Net on total investment is the number that matters for your return.
Is buy-to-let still worth it for a higher-rate taxpayer? It can be, but tax takes a larger share. In the example above, the yield falls from 7.4% before tax to about 4.4% after it for a higher-rate taxpayer with no borrowing. Check your own position with an accountant.
Should I buy with cash or a mortgage? Borrowing can raise or lower your return, and it changes the tax result. The figures above assume cash. A mortgage broker and your accountant can model your situation.
Should I buy a property that needs work, or one that's ready to let? It depends on your time, skills and risk tolerance. Works add cost, delay and uncertainty. A ready, tenanted property costs more upfront but earns from day one. Either can work if every cost is priced in.
Can I invest in a buy-to-let somewhere I don't live? Many investors do. What matters is the tenant demand, the condition of the property, and having management you can rely on. Check who looks after it and what that costs.
This article is general information, not financial, tax or legal advice. Akoya is not regulated by the FCA.
Sources
- ONS: Private rent and house prices, UK: September 2026
- GOV.UK: Stamp Duty Land Tax residential rates
- GOV.UK: Changes to tax rates for property, savings and dividend income
- Bank of England: Bank Rate
- Lightfoots: What's changed for landlords since 1 May 2026
- Protax: Buy-to-let tax guide 2026
- Deal figures and comparable sales: Akoya BTL investment pack (Rightmove sold prices)