Buy-To-Let in 2026: A Quick Guide

Published 1 January 2026

The below article has information contained within that was correct at the time of publication but is subject to change. This is for information purposes only and does not constitute advice.

Buy-To-Let in 2026: A Quick Guide

Written by Doug Miller, Director at Lansdown Financial Services.

Doug Miller is a mortgage broker and co-founder of Lansdown Financial Services, based in Bath, quoted in 30+ news articles including the Guardian, Sky News, This is Money and the Sun.

Buy-to-let property remains an option for investors in 2026, but buying a property to rent out involves considerably more than finding somewhere with an attractive rental income.

Mortgage lenders have specific affordability requirements, landlords face additional costs and tax considerations, and the rules around renting property in England have changed significantly.

A buy-to-let mortgage also works differently from a residential mortgage. Rather than assessing borrowing primarily against your salary, lenders generally place significant importance on the property’s expected rental income.

Understanding how the mortgage, rental figures and overall investment costs fit together is essential before committing to a purchase.

Key Points: The Short Version

Don’t have time to read the full article? Here are the six key things you need to know.

• Buy-to-let mortgages work differently: Lenders usually assess the expected rental income against the borrowing using a rental affordability calculation.
• You’ll typically need a larger deposit: A 25% deposit is a common starting point for buy-to-let mortgages, although lender requirements vary.
• Rental income determines borrowing potential: Lenders commonly use an Interest Coverage Ratio (ICR) to establish whether the rent sufficiently supports the mortgage.
• Interest-only mortgages are common: These can reduce monthly payments, but you’ll still need a strategy for repaying the original capital.
• Tax and additional purchase costs matter: Higher Stamp Duty rates, rental income tax and ongoing landlord expenses can affect your returns.
• Landlord rules changed in 2026: The Renters’ Rights Act introduced significant changes in England from 1 May 2026, including the abolition of Section 21 no-fault evictions.

The bottom line: Buy-to-let can be a suitable investment for some people, but a property generating strong rental income doesn’t automatically mean it will qualify for the mortgage you want or produce a worthwhile financial return.

The Full Guide: Buy-to-Let Mortgages in 2026

Want to understand the detail? Below, we explain buy-to-let mortgage deposits, rental affordability, interest-only borrowing, tax considerations and the landlord rules affecting property investment in 2026.

This guide focuses primarily on conventional residential buy-to-let property in England. Mortgage criteria and property regulations can differ elsewhere in the UK.

In This Guide

• How buy-to-let mortgages work
• Deposit and borrowing requirements
• How rental affordability is calculated
• Interest-only versus repayment mortgages
• Rental yields and running costs
• Buying personally or through a limited company
• Landlord regulations in 2026
• Whether buy-to-let is worth considering
• Frequently asked questions

What Is a Buy-to-Let Mortgage?

A buy-to-let mortgage is designed for a property that you intend to rent to tenants rather than occupy as your own home.

Although buy-to-let mortgages share some similarities with standard residential mortgages, lenders assess the borrowing differently.

With a residential mortgage, your personal income and expenditure normally form the basis of the affordability assessment.

With a buy-to-let mortgage, lenders generally focus on whether the expected rental income sufficiently supports the mortgage.

Your personal income and circumstances can still be relevant, but the rental potential of the property is particularly important.

This means a property that appears affordable based on its purchase price and your deposit may not necessarily meet a lender’s rental affordability requirements.

How Much Deposit Do You Need for a Buy-to-Let Mortgage?

Buy-to-let mortgages generally require a larger deposit than residential mortgages.

A deposit of approximately 25% is common, with many lenders offering products at around 75% loan-to-value (LTV).

Some products may be available with smaller or larger deposits, depending on the lender, property and your circumstances.

For example:

Property purchase price	25% deposit	Mortgage required
£200,000	£50,000	£150,000
£250,000	£62,500	£187,500
£300,000	£75,000	£225,000
£400,000	£100,000	£300,000

Illustrative figures assuming a mortgage at 75% loan-to-value, excluding Stamp Duty, legal fees and other purchase costs.

Generally, a larger deposit reduces the loan-to-value ratio and may provide access to a wider range of mortgage products or more competitive rates.

However, having sufficient deposit doesn’t automatically mean the mortgage will be approved.

The expected rental income must also support the borrowing under the chosen lender’s criteria.

How Do Lenders Calculate Buy-to-Let Affordability?

This is one of the biggest differences between buy-to-let and residential mortgages.

Buy-to-let lenders commonly use an Interest Coverage Ratio (ICR).

Rather than simply checking whether the monthly rent equals the mortgage payment, lenders typically require the rent to cover a higher proportion of the mortgage interest calculated using a specified assessment rate.

Different lenders have different requirements, which may depend on your tax position, the mortgage product and whether you’re buying personally or through a limited company.

Example Buy-to-Let Rental Affordability Calculation

Imagine you’re considering a £200,000 interest-only buy-to-let mortgage.

For illustration, assume the lender uses a 5.5% interest rate for its affordability assessment and requires rental income covering 145% of the assessed mortgage interest.

Affordability calculation	Amount
Proposed mortgage	£200,000
Illustrative assessment rate	5.5%
Assessed monthly mortgage interest	£916.67
Required rental coverage	145%
Minimum monthly rent	Approximately £1,329

Illustrative calculation only. Lender stress rates, coverage requirements, eligible rental income and assessment methods vary.

In this example, the expected rental income would need to be approximately £1,329 per month to meet the assumed affordability calculation.

However, another lender could use different figures and reach a different borrowing decision.

This is why two mortgage lenders can assess the same property and arrive at different maximum mortgage amounts.

Does Your Personal Income Matter?

Sometimes.

Although rental income is generally central to buy-to-let affordability, some lenders have minimum personal income requirements.

Others consider your wider financial circumstances or offer more flexible approaches.

Some lenders also allow what’s known as top slicing.

This means they may consider eligible personal income to support the mortgage where the property’s rent doesn’t fully satisfy the usual rental calculation.

Top slicing isn’t available with every lender, and requirements vary.

At Lansdown Financial Services, we’d look at the rental property and your individual circumstances before establishing which lenders may be suitable.

Are Buy-to-Let Mortgages Usually Interest-Only?

Many buy-to-let mortgages are arranged on an interest-only basis.

This means your normal monthly payment covers the interest charged but doesn’t reduce the original mortgage capital.

For example, if you borrow £200,000 on an interest-only mortgage, you could still owe £200,000 when the mortgage term ends.

You’ll therefore need an acceptable strategy for repaying that balance.

For some landlords, this may involve eventually selling the property, subject to the lender’s requirements.

Repayment buy-to-let mortgages are also available.

Interest-Only vs Repayment Buy-to-Let

Feature	Interest-only mortgage	Repayment mortgage
Monthly payments	Generally lower initially, all else being equal.	Generally higher because capital is also repaid.
Mortgage balance	Doesn’t normally reduce through monthly payments.	Gradually reduces over the mortgage term.
End of mortgage term	Original capital remains to be repaid.	Mortgage should be repaid if payments are maintained.
Main consideration	Requires a credible repayment strategy.	Higher monthly cost can affect cash flow.

Interest-only can help with monthly cash flow, but lower mortgage payments don’t automatically mean the investment is more profitable or less risky.

The appropriate repayment method depends on your circumstances and investment plans.

What Is a Good Rental Yield for Buy-to-Let?

Rental yield is a way of comparing the rental income generated by a property with its purchase price.

Gross rental yield is calculated by dividing the annual rental income by the property’s purchase price and multiplying by 100.

For example, imagine you purchase a buy-to-let property for £250,000 and receive £1,250 per month in rent.

That provides £15,000 in annual rental income.

[
\text{Gross rental yield} = \frac{£15,000}{£250,000}\times100 = 6%
]

In this example, the property’s gross rental yield is 6%.

However, gross yield doesn’t account for mortgage interest, maintenance, insurance, letting-agent fees, tax or periods when the property is empty.

A property with an attractive gross rental yield doesn’t automatically generate a strong net financial return.

It’s also important to separate investment performance from mortgageability.

A property may look attractive financially but still be difficult to mortgage because of its construction, lease terms, condition or other lender requirements.

What Costs Should Buy-to-Let Landlords Budget For?

The mortgage payment is only one part of the cost of owning a rental property.

Before investing, it’s important to understand the initial purchase costs and ongoing expenses.

Cost	What to consider
Mortgage repayments	Monthly borrowing costs and future interest rate changes.
Stamp Duty	Higher rates normally apply to additional residential property purchases.
Legal and purchase costs	Conveyancing, mortgage fees, valuation and survey expenses.
Maintenance and repairs	General upkeep, appliances and unexpected repairs.
Insurance	Suitable landlord buildings and contents insurance.
Letting-agent fees	Tenant finding, rent collection or property management charges.
Empty periods	Mortgage and other expenses continue when the property isn’t rented.
Tax	Tax on rental profits and relevant finance-cost restrictions.
Property charges	Service charges, ground rent where applicable and licensing costs.

A realistic investment assessment needs to consider the property’s net income rather than just the advertised rent.

How Much Stamp Duty Do You Pay on a Buy-to-Let Property?

If you’re purchasing an additional residential property in England or Northern Ireland, higher rates of Stamp Duty Land Tax will generally apply.

For example, a qualifying additional residential property costing £250,000 would currently attract approximately £15,000 in Stamp Duty, assuming no other surcharge, relief or exemption applies.

That’s a substantial additional cost compared with the deposit alone.

Different property transaction taxes apply in Scotland and Wales.

We’d recommend confirming the exact amount payable with your solicitor or tax adviser before committing to a purchase.

How Is Buy-to-Let Rental Income Taxed?

Rental income may be subject to Income Tax if you own the property personally.

The amount payable depends on your rental profits, allowable expenses and individual tax circumstances.

For individual residential landlords, qualifying mortgage finance costs are generally subject to basic-rate Income Tax relief rather than being fully deducted from rental income when calculating taxable profits.

Limited companies are treated differently.

This is one reason the way you own a buy-to-let property can have a significant effect on its overall financial performance.

We’d strongly recommend speaking to an accountant or qualified tax adviser before deciding how to structure a buy-to-let investment.

Mortgage advisers can explain the borrowing implications of different ownership structures, but mortgage advice shouldn’t replace professional tax advice.

Should You Buy a Buy-to-Let Personally or Through a Limited Company?

Both ownership structures may be possible, subject to lender requirements.

Some landlords purchase investment properties in their own names, while others use a limited company, often established as a Special Purpose Vehicle (SPV) for property investment.

There can be different mortgage and tax implications for each approach.

Personal vs Limited Company Buy-to-Let

Personal ownership	Limited company ownership
Mortgage application in your own name.	Mortgage application through an eligible company.
Rental profits generally subject to personal Income Tax rules.	Profits generally subject to Corporation Tax rules.
Individual landlord finance-cost restrictions may apply.	Different rules generally apply to qualifying company finance costs.
Wide range of specialist lending options.	Specialist company mortgage products and criteria.
Tax outcome depends on your personal circumstances.	Taking profits out of the company can create additional tax considerations.

Buying through a company doesn’t automatically mean you’ll pay less tax.

Your income, wider property portfolio, future plans and how you intend to receive rental profits are all important.

Changing ownership later could also involve legal, mortgage and tax costs.

It’s therefore worth obtaining appropriate advice before purchasing.

What Is a Portfolio Landlord?

Mortgage lenders commonly treat borrowers with four or more mortgaged buy-to-let properties as portfolio landlords.

Portfolio lending can involve additional underwriting requirements.

Instead of assessing only the property you’re buying or remortgaging, the lender may review your wider property portfolio.

This can include rental income, outstanding mortgage balances, property values and existing financial commitments.

For example, if you already own several rental properties and want to purchase another, the lender may need information about the performance of your portfolio as a whole.

Different lenders have different portfolio requirements, making lender selection particularly important for investors with multiple properties.

Can You Get a Buy-to-Let Mortgage as a First-Time Landlord?

Yes, potentially.

You don’t necessarily need previous landlord experience before arranging a buy-to-let mortgage.

Some lenders are happy to consider first-time landlords, while others impose additional criteria.

Your personal circumstances and whether you already own your own residential property can also matter.

If you’re a first-time buyer who doesn’t currently own a home, the available options may be more limited, but that doesn’t automatically mean a buy-to-let mortgage is impossible.

We’d assess your circumstances and identify suitable lenders rather than assuming you won’t qualify.

Does the Type of Property Affect Your Mortgage Options?

Yes.

Lenders don’t just assess the borrower and expected rent. They also consider the property being used as security for the mortgage.

A conventional house rented to a single household is generally more straightforward.

Other properties may require specialist mortgage products or more detailed lender assessments.

Examples can include:

• Houses in Multiple Occupation (HMOs).
• Flats above commercial premises.
• Properties with unusual construction.
• Properties with short or restrictive leases.
• Multi-unit residential blocks.
• Properties requiring significant refurbishment.

Some of these properties may also require specific licences or permissions.

If you’re considering a less conventional investment property, we’d recommend checking its mortgageability before committing to significant legal, survey or purchase costs.

What’s Changed for Buy-to-Let Landlords in 2026?

One of the most significant developments for landlords in England is the implementation of the Renters’ Rights Act 2025, with major changes taking effect from 1 May 2026.

These reforms changed important aspects of how private residential tenancies operate.

What Changed Under the Renters’ Rights Act?

The key changes include:

• Section 21 no-fault evictions were abolished: Landlords can no longer use the usual Section 21 process to regain possession of a property and must rely on the applicable legal grounds.
• Assured periodic tenancies became the standard: Most existing assured shorthold tenancies converted to assured periodic tenancies, while new qualifying tenancies generally use that arrangement.
• Possession rules changed: Landlords must follow the relevant legal grounds and procedures when seeking possession.
• New requirements affect landlords: Changes to rent increases, tenancy administration and other landlord obligations must be understood.

These changes are relevant to anyone purchasing a rental property in England during 2026.

They don’t necessarily mean buy-to-let is no longer a viable investment, but they do affect how landlords manage their properties and plan for the future.

Further reforms are scheduled to be introduced in phases.

Mortgage advice and landlord legal advice are different things, so we’d recommend checking the latest official guidance and obtaining appropriate legal advice where necessary.

What Are the Risks of Buy-to-Let Property Investment?

Property investment involves financial risks, even where the expected rental income appears attractive.

For example, tenants may leave, repairs may be needed, mortgage interest rates could increase or property values may fall.

You’ll still have financial commitments when the property is empty.

It’s therefore worth considering how the investment would perform if rental income were lower than expected or expenses increased.

Why Your Exit Strategy Matters

An exit strategy is particularly important if you’re taking an interest-only mortgage.

You should consider what you expect to happen in five, ten or twenty years.

Do you intend to retain the property into retirement?

Will you eventually sell it to repay the mortgage?

Are you planning to build a larger portfolio?

And would you still be comfortable holding the property if its value fell or running costs increased?

A clear plan doesn’t eliminate these risks, but it can help you assess whether the investment suits your longer-term objectives.

Is Buy-to-Let Still Worth It in 2026?

It can be, but there’s no answer that applies to every property or investor.

For some landlords, buy-to-let continues to form an important part of their long-term investment plans.

For others, the deposit requirements, tax treatment, additional costs and responsibilities may make it less attractive.

We wouldn’t recommend purchasing a rental property simply because the expected rent exceeds the mortgage payment.

Instead, we’d consider the full financial picture.

Question	Why it matters
What is the expected rental income?	Helps establish borrowing potential and projected returns.
How much will the property cost to purchase?	Deposit, Stamp Duty and other costs affect the initial investment.
What are the running expenses?	Maintenance, insurance, management fees and empty periods reduce returns.
How will rental profits be taxed?	Tax treatment affects the investment’s net financial performance.
What happens if mortgage rates rise?	Higher borrowing costs could reduce cash flow.
What’s the long-term plan?	Understanding your exit strategy is particularly important with interest-only borrowing.

The most important distinction is that a property being mortgageable doesn’t automatically make it a good investment.

Our role is to help you understand the borrowing options available and ensure the proposed mortgage is appropriate for what you’re trying to achieve.

Frequently Asked Questions About Buy-to-Let Mortgages

Can I Get a Buy-to-Let Mortgage with a 20% Deposit?

Potentially, yes.

Some lenders offer buy-to-let products above 75% loan-to-value, although the choice may be more limited.

Eligibility depends on the property, rental income and your circumstances.

Do You Need a High Salary for Buy-to-Let?

Not necessarily.

Rental income usually plays a significant role in buy-to-let affordability, although some lenders have minimum personal income requirements.

Other lenders may consider eligible personal income through approaches such as top slicing.

Can I Live in a Property with a Buy-to-Let Mortgage?

A conventional buy-to-let mortgage is intended for a property rented to tenants rather than occupied as your own home.

If you intend to live in the property, you’ll normally need an appropriate residential mortgage or another arrangement expressly permitted by the lender.

Can I Remortgage an Existing Buy-to-Let Property?

Yes, subject to lender criteria.

You may be able to remortgage to another lender or switch products with your existing lender.

The lender will assess factors such as the property’s value, outstanding mortgage balance, rental income and your circumstances.

How Lansdown Financial Services Can Help

Buy-to-let mortgages can become complicated surprisingly quickly.

A straightforward rental property with a substantial deposit and strong rental income may provide a good range of mortgage options.

However, the process can become more involved if you’re buying through a limited company, purchasing an HMO, building a property portfolio or applying as a first-time landlord.

At Lansdown Financial Services, we’ll look at the property, expected rental income, available deposit and your circumstances before researching suitable mortgage lenders.

We’ll consider lender affordability requirements, mortgage rates, fees and product features to help you understand the borrowing options available.

As a free, whole-of-market mortgage adviser with access to more than 70 lenders, we provide straightforward, personalised mortgage advice without the jargon.

Considering buying a rental property in 2026, or looking to remortgage an existing buy-to-let?

Contact Lansdown Financial Services or call 01225 459515 to speak to one of our award-winning mortgage advisers for free, expert mortgage advice.

Your property may be repossessed if you do not keep up repayments on your mortgage.

Not all buy-to-let mortgages are regulated by the Financial Conduct Authority. Tax treatment depends on individual circumstances and may be subject to change.

About the Author

Written by Doug Miller, Director at Lansdown Financial Services.

Doug Miller is a mortgage broker and co-founder of Lansdown Financial Services, based in Bath, quoted in 30+ news articles including the Guardian, Sky News, This is Money and the Sun.