Sep 23, 2026 · 25 min
Buy-to-let shifts from leveraged bet to yield business
Is Buy-to-Let Still a Good Investment?
Buy-to-let can still generate returns, but taxes, borrowing costs, regulation and weaker reliance on capital growth have changed the calculation for landlords.
- 1Rental income supplied roughly two-thirds of typical buy-to-let returns over three decades, while capital growth mattered less after the financial crisis.
- 2Mortgage-interest relief restrictions and rising compliance costs have made ownership structures, tax exposure and professional management central to landlord economics.
- 3Prospective landlords now need local yield research, careful pricing, mortgage-rate planning, diversification and stronger tenant-screening practices.
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Aneisha Beveridge explains why a £1-to-£22.30 buy-to-let comparison is incomplete without accounting for leverage, reinvestment and costs.
The brief
Aneisha Beveridge traces buy-to-let from the 1996 launch of specialist mortgages, when leverage and interest-only borrowing opened rental property to ordinary investors.
The episode separates income from appreciation: rental income generated roughly two-thirds of typical returns, while capital growth weakened after the financial crisis.
A £1-to-£22.30 comparison looks impressive, but mortgage leverage, reinvestment assumptions and costs make property returns difficult to compare directly with equities.
Tax changes under George Osborne, especially restrictions on mortgage-interest relief, could leave higher-rate landlords with tax bills despite little or no profit.
The modern landlord faces a yield-focused market, higher compliance costs and heavier penalties, with northern regions generally offering more income than London.
Beveridge’s practical test is demanding: understand the local market, buy carefully, manage rate risk, diversify and reference tenants thoroughly.
What was said on this episode
19 statements · 11 positive · 5 negative · 1 mixed · 2 neutral
Regulation and tax changes have reduced the appeal of being a landlord.
“Thanks to regulation and tax changes, I mean a lot of regulation and tax changes, being a landlord isn't quite as appealing as it once was.”
Listen at 2:41
Rental income generated roughly two-thirds of typical buy-to-let returns over 30 years.
“around two-thirds of an investor's typical kind of total return has come from rental income.”
Listen at 5:27
Rents generally outperformed house-price growth during the last 15 years.
“over the last 15 years, we've generally seen rents outperform house price growth.”
Listen at 5:43
Leverage has made buy-to-let more appealing than comparable investments.
“It's the use of leverage really that kind of makes buy or has made buy to let so appealing over.”
Listen at 8:04
Mortgage-interest relief restrictions reduced buy-to-let profitability.
“that was one of the big, big factors that really started to kind of dent profitability of buy-to-let.”
Listen at 9:43
Higher-rate landlords could owe tax despite making a buy-to-let loss.
“it meant that you could actually be paying a tax bill, even if you made a loss profitability wise on your buy to let.”
Listen at 10:28
Leveraged buy-to-let investment now needs targeted, yield-focused selection because capital gains are unreliable.
“Investment has to be far more targeted now. It generally has to be yield focused, particularly if you are using a mortgage to purchase that property, because you can't rely on capital gains like some of the older landlords were able to do so.”
Listen at 15:46
Buy-to-let purchases account for just under 10% of homes sold this year.
“People are still investing around just under 10% of all homes sold so far this year. were purchased as buy-to-lets.”
Listen at 16:01
Northeast England has the highest regional buy-to-let yields, averaging about 9.8%.
“the northeast is the highest yielding region in the country, and gross yields there on new buy-to-let purchases are averaging around 9.8%”
Listen at 16:44
Limited-company structures may provide more scope to mitigate future targeted tax measures.
“the way that limited companies are structured gives you a bit more sort of scope to kind of get around some of the more targeted tax measures that might still come down the line.”
Listen at 18:17
National insurance on rental income is unlikely but possible.
“Whether we'll see that come in, it feels unlikely, but it is a possibility.”
Listen at 18:40
Landlord compliance requirements and fines are major barriers to entry.
“that is definitely one of the bigger barriers to entry nowadays is you really have to know your stuff because some of the fines now associated with not doing your job properly as a landlord are pretty hefty.”
Listen at 19:17
Economies of scale and diversification benefit buy-to-let landlords.
“economies of scale pay off in these scenarios, don't they? But diversification is really important as well”
Listen at 20:13
Landlords can lock in mortgage rates early to spread interest-rate risk.
“you do have the ability to lock in early with some of these kind of buy-to-let offers and sort of spread your risk in that manner.”
Listen at 21:01
Prospective landlords should understand the local market before buying.
“the number one crucial tip is really understand the market that you're buying into.”
Listen at 21:13
A property’s purchase price strongly determines its long-term performance.
“it's the purchase price of a property that really then dictates the performance of that asset longer term.”
Listen at 21:20
Landlords should reference tenants carefully.
“Referencing is an absolute must.”
Listen at 21:47
More landlords will use rent-guarantee and legal-expense insurance to mitigate risk.
“We think we're going to see a lot more landlords turn to products like that just to sort of mitigate risk and have a bit of a backup.”
Listen at 22:19
Buy-to-let investment may become viable for Beveridge in a few years.
“I think there could be some scope in a couple of years' time, potentially.”
Listen at 22:42
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.