top of page

Is Buy To Let Still Worth It In 2023?

Updated: Mar 26, 2023

The changes made to the mortgage interest relief and additional stamp duty for second properties have led prospective landlords to ponder whether investing in buy-to-let properties is still profitable in today's market.

The revised tax laws have adversely affected the earnings of many landlords.

Therefore, the question arises whether property investment is still a viable means of generating income.

The Following Topics Are Covered

How Has Buy To Let Changed?

Over the past few years, the growth of property prices has slowed down, which has resulted in higher risk associated with buying properties for the purpose of letting.

Additionally, the government has made significant changes to the buy-to-let market, including the introduction of a 3% surcharge on stamp duty for second homes and buy-to-let properties from 2016 onwards.

This means that on a £300,000 purchase, a property investor will pay about £9,000 more than someone buying their own home for the first time. Stamp duty can be calculated here on the HRMC Website

In Scotland, second homeowners and buy-to-let landlords have to pay an extra 4% in stamp duty.

The government changed individual landlords' tax relief in April 2020 under section 24. In spite of mortgage interest costs, buy-to-let landlords are now required to pay income tax on all rental income.

Private landlords with mortgages are no longer able to fully offset mortgage interest costs against income tax bills on rent because they now receive a 20% tax credit.

As a result, after paying mortgage interest, landlords no longer base their taxation on rental income but rather on revenue. You'll be relieved to learn that mortgage interest is treated as a business expense if you're thinking about starting your own limited company.

This means that you can deduct the cost before paying corporation tax if a limited company owns your property. It's always a good idea to get financial counsel from an authorized tax expert if this is something you're thinking about.

How Has Buy To Let Profits Changed?

The removal of mortgage interest relief has led to a significant decrease in profits for landlords, especially those who fall under the higher tax bracket.

The complete tax relief of 40% on mortgage payments is no longer offered to them, effectively halving their tax relief.

This change is particularly harsh for landlords with interest-only mortgages, which are mostly paying higher tax rates.

For instance, a landlord earning £100 in monthly rent and paying £500 in mortgage interest can see a change in their tax.

Before 2017

From 2020

Annual rental income



Annual mortgage interest



Taxable annual income



Tax credit of mortgage interest

0% (£0)

+20% (£1,200)

Tax bill (lower rate)



Tax bill (higher rate)



What Are The Advantages And Disadvantages Of Buy To Let Currently?

Determining whether buy-to-let is a suitable investment option for you involves considering more than just tax implications.

The decision largely hinges on the type of investment you seek and the purpose behind your investment activities. In evaluating buy-to-let, it's important to weigh its advantages and disadvantages as a means of achieving investment returns.

Advantages Of Buy To Let

  • It is possible to earn income by renting out your property, although the amount may not be as high as in previous years.

  • Certain regions in the UK, including Liverpool, Manchester, and York, offer high rental yields of up to 8%, whereas other areas provide around a 3% yield. Additionally, you may experience an increase in property value over time, resulting in capital growth.

  • To protect yourself against potential losses, damages, and legal expenses, insurance coverage is available.

Disadvantages Of Buy To Let

  • Your profits may be affected by a higher tax bill that you need to pay. In case your property remains unoccupied and you don't have proper insurance, you may not be able to earn any income.

  • If there is a decline in property prices, your capital will also decrease. If you have an interest-only mortgage, you'll have to make up for any financial shortfall if the property is sold for less than its original price.

  • You should also consider the expenses of stamp duty, insurance, and wear & tear. It is essential to keep in mind that being a landlord comes with significant responsibilities, so it's important to research properly before making any decisions.

Many individuals opt for buy-to-let properties as a means of generating retirement income, frequently withdrawing substantial amounts from their pension funds to achieve this.

However, it is crucial to seek the advice of a financial advisor beforehand, as accessing pension funds can result in significant consequences and potential tax liabilities.

How Do I Get Started With Buy To Let?

Step 1

It's important to organize your finances, especially if you're planning to invest in property. Seeking advice from a financial adviser can help you determine the amount of money you should invest and the desired returns.

In addition, consulting with a mortgage broker can help you secure the best mortgage deal or mortgage in principle so that you're prepared to make offers when you find the ideal property.

Step 2

To purchase a rental property, the process of finding and getting your offer accepted may be faster than buying a home, but it could also take longer. It is advisable to allocate several months for the process to be completed.

Step 3

It is important to obtain insurance to safeguard against unforeseen expenses such as tenant injuries, rental loss, and property damage in addition to buildings insurance.

Step 4

To locate tenants for your property, you have the option of utilizing an agency or conducting your own search. The decision on which approach to take should be based on your level of involvement.

However, it's important to keep in mind that regardless of whether you personally know and choose your tenants, it's crucial to create a legally binding agreement to avoid potential conflicts. Even minor issues have caused the end of friendships in the past.

Step 5

Investing in buy-to-let properties is a type of investment that requires active involvement. It is crucial to regularly review your mortgage when its current deal expires and take care of any essential maintenance work on the property.

Additionally, it is important to ensure that your earnings from buy-to-let investments are managed in a tax-efficient manner, for which the assistance of an accountant can be sought.

How Is The Current Market Looking?

The current situation shows that the buy-to-let market is not flourishing, as only 46% of landlords are positive about their future prospects. However, these landlords may be proven right in the long run as there are indications of a recovery, although it may take time.

Even though there is a sense of negativity at present, slightly more than half of current property investors intend to put more money into housing by 2023.

Additionally, 68% of individuals who have more than five properties in their portfolios or portfolio landlords plan to take advantage of "increased opportunities in 2023".

The rental market is currently experiencing higher demand than supply, and experts predict that landlords will have a profitable year in 2023. As a result, this could be an advantageous time for new investors to enter the market.

To quickly sell their properties and leave the market, some buy-to-let investors are turning to auction houses and offering a 25-30% discount.

This could be an opportunity for investors to purchase properties at a lower price and generate better returns, but this chance may not last long as another buy-to-let boom could be on the horizon.

What About The Future of Buy To Let?

Despite the alarming headlines, things are gradually returning to normal. The economy is showing signs of improvement, and if the buy-to-let market stabilizes, investors may return to it.

Various economic indicators have given some hope in recent times. Inflation has slowed down, and GDP is increasing. If this trend continues, borrowing costs may decrease in the next few years.

According to experts, the base rate is expected to reach its peak this year at around 4.25%, but it is predicted to decline by 2024. Savills and the Office for Budget Responsibility anticipate a consistent rise in house prices from 2025 onwards.

According to recent reports, buy-to-let investors may experience a complete turnaround in their financial situation in the near future.

Despite claims that landlords are struggling to earn a decent income due to increasing costs, rising rents could change the game.

Capital Economics predicts that rents will continue to rise, with a peak growth rate of 5.3% in mid-2023. Additionally, house prices are expected to decline by 12%, resulting in an increase in gross rental yields from 4.3% to 4.6% in Q1 2023.

Property Investments UK has noticed a 20% increase in inquiries from buy-to-let investors compared to last year, marking the highest level seen in five years.

How Can The Specialist Finance Industry Help?

Despite the current struggles in the market, there is a possibility of a buy-to-let boom in the near future. However, it remains uncertain whether mainstream lenders will be capable of fulfilling the demand if property investors show interest in the market, similar to what they did in 2021/22.

The strict criteria set by lenders has made it challenging for property investors to gain a foothold in the market. In January, mortgage approvals dropped to their lowest level since 2009. Although there has been an increase in the number of buy-to-let mortgage products lately, they are still far from reaching the levels observed in mid-2021.

But where mainstream lending falls short, the specialist finance industry will be there to support buy-to-let investors. At Accelerated Finance, we have access to a range of products available for landlords. All of which, can be issued in mere days.

It doesn’t matter if you’re a first-time landlord, or an experienced investor, we’ll never leave you in the dark. If you want to take advantage of the next potential buy-to-let boom, we’re can help assist you.



This article is intended to provide a general understanding of the topic. The contents should not be treated as advice.

Accelerated Finance Limited only considers applications for commercial or investment properties.

Accelerated Finance Limited is not regulated by the financial conduct authority and only provides unregulated loans via our network of lenders. Your property is at risk if you fail to make payments on a Mortgage Contract. Please note that Accelerated Finance Limited and its employees do not give financial advice or recommendations on any product.

Author: Aakash Nagrani - Director 

Aakash Nagrani Author
bottom of page