Is Buy-to-Let Still Worth It? 89% of UK Landlords Are Still Making a Profit Despite Rising Costs

For years, Britain's buy-to-let market has been dominated by stories of landlords selling their properties amid fears of a costlier rental market. Higher mortgage rates, tougher tax rules, mounting regulation, and proposed rental reforms have fuelled predictions of a mass exodus from the private rental sector.

Prop Invest UK reported that in 2025, around 93,000 landlords left the rental market, and it estimated that another 110,000 are expected to leave in 2026. In addition, many smaller property owners have exited the market amid rising costs, tax changes, and increasing regulation, particularly the Renters' Rights Act. However, despite this decline, the private rental sector continues to house millions of tenants, and many professional landlords are expanding their portfolios rather than retreating.

Despite rising costs and increasing legislative pressure, most landlords remain profitable, with rental yields climbing to their highest level in more than a decade. Although the cost of entering the market has risen sharply, rental income has remained resilient, helping many landlords offset higher expenses. The figures suggest that while buy-to-let is no longer the straightforward investment it once was, it coinues to deliver healthy returns for landlords who adapt to a rapidly changing market.

Profitability Remains Surprisingly Strong

Recent analysis by Pegasus Insight paints a more optimistic picture than many headlines suggest.

The study found that in December 2025, 89% of landlords reported making a profit from their rental portfolios during the third quarter of 2025. Of those, 17% reported large profits, while 72% reported smaller but positive returns. Average gross rental yields reached 6.6%, the highest level recorded in more than a decade, while overall landlord profitability climbed to a six-year high.

Research conducted by Aldermore also found that 85% of landlords remained profitable, while only 6% reported making a loss. However, confidence about the future has weakened as investors prepare for further regulatory changes, particularly the implementation of the Renters' Rights Act.

The findings suggest that while profitability remains robust, landlords are becoming increasingly cautious about the years ahead.

Rising Costs Are Changing the Economics of Buy-To-Let

There is little doubt that owning rental property has become significantly more expensive.

According to research by lettings and property management platform, Dwelly, the average upfront cost of purchasing a buy-to-let property reached £16,824 in 2025, a 63.3% increase from 2024. Much of that increase was driven by higher Stamp Duty Land Tax on additional property purchases, creating a significant barrier for first-time investors.

Landlords have also faced higher borrowing costs, changes to mortgage interest tax relief, rising insurance premiums, maintenance bills, and increasingly complex compliance requirements.

However, there are signs that financing pressures have begun to ease. Dwelly also found that average mortgage interest costs fell by almost 40% during 2025, contributing to a 24.6% reduction in operating costs for many landlords. Combined with rising rents, this has helped many investors protect or improve profitability despite higher regulatory costs.

A Changing Landlord Market

While headlines often focus on landlords leaving the sector, the picture is more complex than a simple exodus.

Property market analysts increasingly describe the buy-to-let market as undergoing a period of change, as landlords continue to search for ways to avoid rising taxes. Smaller landlords with one or two properties have been the most likely to sell, squeezed by taxation, regulation, and higher borrowing costs. At the same time, larger portfolio landlords and investors buying through limited companies have continued to acquire properties, attracted by strong tenant demand and improving rental yields.

Rather than signaling the end of buy-to-let, this suggests the sector is becoming increasingly professionalised, with experienced investors treating property as a long-term business rather than a passive investment.

Strong Tenant Demand Is Supporting Rental Income

Surprisingly, many of the same pressures affecting landlords have strengthened the rental market.

According to IFA Magazine, higher mortgage rates and affordability constraints have delayed home ownership for many first-time buyers, while the supply of rental homes has tightened as smaller landlords have sold their properties. The result has been sustained competition for rental properties and continued rent growth across much of the country.

For landlords who have remained in the market, this imbalance between supply and demand has supported rental income and helped offset rising operating costs. It also explains why average gross rental yields have climbed to their highest level in more than a decade.

The Verdict

The evidence suggests that reports of the death of buy-to-let have been exaggerated.

There is no question that the market has become more demanding. Entry costs have risen sharply, regulation has increased, and many smaller landlords have decided to leave the sector. Nevertheless, the data also shows that landlords who remain have adapted to this challenging environment.

With 85–89% of landlords still making a profit, average annual profits exceeding £16,000, and rental yields at their highest level in more than a decade, buy-to-let continues to offer attractive long-term opportunities for well-prepared investors.

The UK landlord market is not disappearing; it is changing. Casual investors are finding it harder to compete, while professional landlords, focused on sustainable rental income, careful cost management, and long-term planning, continue to demonstrate that property remains a good investment in 2026.