The landlords going all in on buy-to-lets

Sally Sutton started her buy-to-let career at a time when many landlords were ending theirs.

After a brief dabble with property investment in 2014, Sally and her husband Nick decided to try again in 2024 and this time, they went all in.

They sold the family home to raise their start-up capital and moved into a rented property in Stockport, Greater Manchester, with their eight-year-old daughter Jaime. It is a “sacrifice” says Sally, while they build the business.

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Using a limited company, rather than purchasing in their own names, Sally and Nick bought their first buy-to-let property, a two-bedroom terraced house which they converted into a three-bed house in multiple occupation (HMO).

Guided by another more experienced investor, the couple leased the whole property to a social housing provider for five years.

“It’s turned out to be our best deal yet,” says Sally, 47, an NHS nurse. Since then, she and Nick, a 44-year-old physiotherapist and lecturer, have bought two further properties, rented to single tenants in Lancashire, where house prices under £100,000 are common. Four more properties are in the final stages of conveyancing – with one as far away as Aberdeen.

Although the market has changed a lot since she first dipped her toe in the water 12 years ago, Sally says there are still plenty of profitable property deals around: “New regulations and new taxes have changed the game, but they haven’t ended it.”

Sally Sutton Money case study — While most landlords are selling up, Sally Sutton is buying more properties

Why more landlords are selling up

Currently, many landlords would argue the buy-to-let game is well and truly over. The arrival of the Renters’ Rights Act and announcement that income tax rates on property income will rise by 2 percentage points next year, are the latest blows in what some see as a prolonged attack by government on landlords.

This began in 2020 with the end of mortgage interest relief for landlords buying properties in their own name, replaced with a 20 per cent tax credit, which shrank profit margins.

Meanwhile, the higher rate of stamp duty levied on landlords, first an extra 3 per cent and now 5 per cent, makes it tougher to raise the capital to invest.

Top that off with higher mortgage rates up from 2.51 per cent for a two-year fix in 2020 to 5.28 per cent today, according to Moneyfacts, and in many parts of the country the numbers no longer work.

According to data from estate agency Savills, more than 250,000 former rental properties were put up for sale in the last 12 months, equivalent to almost 700 properties a day.

Looking forward, some 42 per cent of landlords who own a portfolio of properties intend to sell at least one in the next 12 months, versus just 8 per cent who plan to buy, according to a survey by Pegasus Insight.

Their reasons for selling come as no surprise; new legislation, too much tax and red tape, and the pressure to meet tougher energy efficiency standards.

But waiting in the wings to scoop up the properties being offloaded by the old guard are a new breed of property investor.

These landlords are looking for ways to maximise the cash they can generate from a property without simply investing in a market with rising prices. In fact, they are more likely to be hunting down the most affordable markets in the UK, where the stamp duty burden is lower.

They make their own opportunities and are prepared to diversify into complex deals such as semi-commercial investments, social housing contracts, blocks of flats and HMOs to achieve their goals.

James Donohue, managing director and founder of Landlord Property Exchange, a buying and selling platform, says that aside from well-funded institutional buyers, it is younger investors most likely to buy at the moment.

“They are more entrepreneurial and ambitious, and see property as a good vehicle to create wealth, viewing the next 20 to 30 years as an opportunity to scale their business,” he says. Many are willing to play the long game and create value through converting, expanding or changing the use of a property.

Where buy-to-let is booming

Like Sally, many are also willing to look further afield for opportunities if they can find better value. With costs higher, yields of 8 per cent or more are now considered a minimum requirement, says Donohue.

Gross rental yield is the amount a property generates in rent each year, expressed as a percentage of its purchase price. The average in the UK is currently 5.8 per cent, analysis by Zoopla shows, but can be 7.9 per cent in the North East of England, where stamp duty bills are also lower at an average of £7,308, according to Paragon Bank’s analysis of HMRC data reveals. This compares to £76,589 in London, £32,813 in the South East and £12,981 in the West Midlands.

Sunderland and Middlesborough offer yields of 9.3 per cent and 8.1 per cent respectively and property prices of below £100,000. Elsewhere, Aberdeen, Burley, Dundee and Hull all offer yields of 8 per cent or more.

Location isn’t the only way to maximise your yield; student and professional HMOs are another option. Paragon’s analysis found that the five most popular postcodes among landlords for the year to May 2026 were all university towns, where landlords bought mostly terraced houses, ripe for HMO conversion.

Rebecca Alcock started investing in buy-to-lets in 2014 and now has a portfolio of 30 properties, including student and professional HMOs. She and her husband Jolly, both 35, focus solely on Sheffield where they live, but plan to make future purchases outside of the city.

Rebecca, who bought her first three properties with money from an inheritance, says: “I was your typical hobby landlord. We did everything ourselves and it was quite unprofessional. We were not running it like a business at all.”

Initially they added to their portfolio by “flipping” properties (buying homes to improve and quickly sell) to generate capital to buy more, but they now buy properties to hold.

Rebecca, who is mum to Summer, eight, Theo, six, and Darcie, five, bought all her properties through a limited company structure, rather than in her own name, which means she and Jolly can still deduct their mortgage costs from their revenue before tax is calculated – a perk that landlords who purchase as individuals are no longer afforded.

This highlights one of the biggest changes for how landlords do business. According to analysis by the lender Together, last year was a record-breaking one for landlords incorporating, with 66,587 new buy-to-let companies established – and the trend looks set to continue.

‘People don’t want to be a landlord any more – and that’s an opportunity’

These days, with a £7m property portfolio, it’s a very different picture for Rebecca and Jolly, who now employ a team to manage their portfolio and use professional tenant software.

Rebecca thinks increased regulation is a good thing for the sector, ensuring that landlords provide safe and compliant homes – although some of the regulations (like £900 for a HMO licence) are cost prohibitive, she says.

But overall, the extra red tape works in her favour: “For us, it creates opportunity. I’m fine dealing with the extra admin, we’ve got the systems in place, we’ve got the staff, so it works out okay for us because we can buy from retiring landlords. But there are definitely people who no longer want to be a landlord and just want out.”

Rebecca’s top tip is to start investing with one property as if you have 100: “Systemise your business and put processes in place from day one, because it is hard to unwind when you have five properties and are jumping to 10.”

Buy tenant management software, she says, and have a proper communication system in place: “Landlords need a formal process of supporting tenants when they are on holiday or unavailable to help.”

Sally’s biggest piece of advice for landlords who want to grow is not to just go for the first deal they come across. If it isn’t going to be profitable after tax, compliance and borrowing costs walk away and find something else.

Now, Sally and Nick’s strategy is to find property deals that allow them to maximise their cash flow, and they’re in the final stages of buying a converted block of three flats to achieve this very objective.

Her ultimate goal? To quit her nursing career and live on their property income. “Most people live pay cheque to pay cheque,” says Sally. “We don’t want that. We’re building our future – not something quick overnight and hoping we make money from it, we’re building something that lasts.”

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The landlords going all in on buy-to-lets

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‘People don’t want to be a landlord any more – and that’s an opportunity’

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