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Phil Rosenberg’s portfolio illustrates how tough it has become for UK landlords. The 44-year-old science researcher owns six properties in Yorkshire. Two are held through a limited company, where interest charges can be offset before tax, and earn a good profit. 

The remaining four, owned in his name, make roughly £1,000 profit each year — “less than I’d earn for a single shift each month in a bar,” he says. What’s worse is that all are on fixed-rate deals secured before 2022, when mortgage rates were very low. When each is remortgaged, the first is due in September, that £1,000 profit will turn into a £2,500 loss, at current rates. 

“Only a significant fall in mortgage rates will make them profitable again,” Rosenberg says. “I’m relying entirely on their capital value to increase to make my investment work.” 

Three years after rising mortgage rates started biting into landlords’ profits, margins for investors like Rosenberg feel cut to the bone. More than half of landlords surveyed by Ipsos for HM Revenue & Customs this month said they earned less than £10,000 in profit from their portfolio.

And all the time costs are increasing. The requirement to improve properties’ energy performance in the next few years looks set to saddle many with higher bills on top of recent safety cost rises, which include gas, electricity and fire safety checks. On top of that, many fear the Renters’ Rights bill, expected to become law this summer, will squeeze margins further. Last October’s budget increased the stamp duty payable on the purchase of investment properties, and the capital gains tax on their sale.

It is perhaps unsurprising, therefore, that investor buying is at record lows, with just one in ten properties bought by landlords between January and April this year. That is the lowest level since 2007, when Hamptons started collecting data. 

Nearly a decade after tax reliefs for landlords started being phased out, many are asking a pressing question: is it still possible to make money from property?

Three years after rising mortgage rates started biting into landlords’ profits, margins for investors like Phil Rosenberg feel cut to the bone © Jo Ritchie/FT

An increasing number think not. Dwindling profits — or losses, in some cases — mean many landlords are preparing to sell up. One in four plan to sell at least one property in the next year, according to the Ipsos survey.

Neil France predicts he will sell all four of the properties he owns in the Wirral, near Liverpool, in the next few years to avoid the cost of energy efficiency improvements required by changes to the Energy Performance Certificate (EPC) regime. He is also finding it increasingly time-consuming and expensive to run them as rentals.

All four of France’s properties currently have D energy efficiency ratings, despite having double glazing and insulation. He estimates that to get each one to the required C rating by the deadline of 2030 will cost him up to £12,000 per property on solar panels and other improvements. For newly tenanted homes, the deadline is still earlier — 2028.

France’s preference for two-year fixed-rate mortgages means he was hit quickly by interest rate rises that started in 2022 — he estimates his mortgage bill has grown from £30,000 to £46,000 on a gross turnover of £120,000. Despite having increased rents, he has little left for the capital work required for the EPC measures.

“This would take at least four years to recoup, by which time I’ll be 75,” he says. “If the regulations don’t change, I’ll need to sell the portfolio ahead of the EPC changes.”

Increases in time and money to run the portfolio mean he may leave the market even earlier — twice, he says, tenants have left homes very damaged after moving out. One caused water damage costing more than £5,000 to repair. In England, landlords must verify tenants have the right live in the UK before a tenancy begins. Many of France’s properties are shared houses and he is constantly checking an official website detailing overseas citizens’ eligibility to rent to ensure he avoids making an error. “I feel like I’m becoming an unpaid immigration officer,” he says.


Buy-to-let landlords are facing the toughest financial conditions in the market’s modern history.

The current market’s roots lie in Margaret Thatcher’s Right to Buy scheme from 1980, which expanded property ownership by allowing council tenants to purchase their homes at a discount, and the 1988 Housing Act. The legislation introduced assured short hold tenancies, making it easier for landlords to evict tenants and increase rents. The phenomenon received far more encouragement, meanwhile, in 1996, when lenders launched the first buy-to-let (BTL) mortgage products.

Interest rates fell for much of the next seven-year period, while house prices increased and rental demand — notably from young professionals and university students — grew steadily. Between 2007 and the peak in 2015, the proportion of homes bought by buy-to-let investors grew from 10 per cent to 16 per cent, according to Hamptons.

But investors have been contending since then-chancellor George Osborne’s 2015 Budget with tax changes designed to make buy-to-let investments less lucrative. Osborne announced a phased withdrawal between 2017 and 2021 of the tax relief that had previously allowed landlords to write off mortgage interest against tax.

While Osborne continued to offer landlords some tax credits for mortgage interest, anyone wanting to retain the full tax relief had to sell their properties into new, limited companies. The conversion entailed the payment of stamp duty on each transaction. Since 2016, they have also had to pay an additional home charge, initially set at 3 per cent but increased to 5 per cent in last October’s Budget.

But even incorporated landlords like Harry Osborne, whose company owns six rental properties in Bath, Bristol and Hampshire, are struggling with rising costs and putting plans to expand their property portfolios on hold.

On most of his properties, Osborne, 32, carried out significant renovations and extensions after buying them. Where possible, to maximise rental income, he split the houses into flats and houses of multiple occupancy (HMOs) — houses accommodating three or more people not from the same family.

Osborne felt forced last year to change his approach because of a combination of higher materials and labour costs, delays in securing planning permission for extensions or change of use, and continued high interest rates. He has not bought a property since.

“My build costs have increased between 50 and 100 per cent, and my finance costs are now close to double,” Osborne says. “The planning system is a shambles — the council in Bath took seven months to give me a decision.”

The wait to receive the licence necessary to rent a property as an HMO is also increasing, Osborne says.

Higher costs mean Osborne has switched to doing homes up to sell rather than keeping them to rent out, but the sluggish sales market is frustrating even this. One of two homes he is trying to sell in Southsea, Portsmouth, has been on the market for five months. “My agent says he hasn’t sold a single home to a BTL investor in 18 months,” he says.

As rising costs squeeze profits for incorporated landlords, some are shifting to mixed-use investments, such as flats with shops below them, to save on stamp duty and increase rents.

Murtaza Kinili has bought his first property investment: a shop with a flat above it on a high street in Swansea, with a limited company © Charlie Bibby/FT

Murtaza Kinili, 35, who owns and runs a fire safety business in London, has just bought his first property investment: a shop with a flat above it on a high street in Swansea, with a limited company.

Because it is considered a mixed-use investment, he pays a reduced rate of stamp duty, and saves the additional residential surcharge of 5 per cent. This and higher rents in the commercial sector mean his net yield after costs, including the interest on his £110,000 loan and tax, is around 9 per cent — much more than he would find for an equivalently priced local residential property. He also benefits from having two diversified rental streams.

“Hopefully in the future residential and commercial rents won’t dip at the same time,” he says.  

Peter Williams, of propp.io, a property finance comparison site that helped to arrange Kinili’s mortgage, says many more of his customers have been favouring mixed-use over residential investments since the October Budget. “The additional 2 percentage point [stamp duty increase on] second homes has made a big difference,” he says. 


Those with three or fewer properties, who still comprise the majority of landlords, have seen the tightest financial squeeze and are most likely to be selling up. “The overall decline in BTL mortgage stock is likely to have come disproportionately from unincorporated landlords,” wrote James Tatch of UK Finance in a report from last July.

Many were only accidental landlords in the first place. The Ipsos survey found that 40 per cent bought their rental property to live in or received it through inheritance or as a gift. For 78 per cent, rental profits are not their main source of income. 

Today, high stamp duty costs prohibit many from selling into limited companies, making them harder hit by the end to mortgage tax relief and rising interest rates, and they are unable to enjoy the economies of scale flowing from larger portfolios.

The bringing of pensions into the scope of inheritance from 2027, and the reform of agricultural property and business property relief in the October Budget, have focused landlords’ minds on inheritance planning.

Iain McLeod, of wealth managers St James’s Place, says he has seen an increase in the number of customers coming to him with proceeds from a buy-to-let property sale since October.

“Selling BTL properties mean you can gift some of the proceeds and you’re not leaving the time-consuming responsibility of liquidating or running a BTL portfolio to children who are likely to have a busy job and a young family,” he says.

Simon Davis, 69, says the inheritance tax challenges around his two Richmond properties, bought in 1998, were the final straw. He is preparing to sell them and leave the landlord sector for good.

“Neither I nor my financial advisers can find a way for my wife and I to pass my two Richmond properties to my kids without incurring excessive tax before or after our demise,” he says. “While it has been a very satisfactory and satisfying project over nearly 30 years, this fact — along with tax and legislative changes and our advancing ages — means that the investment has run its course.”

Can landlords still make money from property? FT readers’ view

With many elements of the Renters’ Rights bill currently being challenged, not least by the major landlords (not us small people — my wife and I only have 10 units in south London), one is not so sure the proposed act will be that vicious for landlords.

However, if this government gets its way, then landlords are in deep trouble. Those who have panic sold will have been proved correct, and the remainder of us will look like a right bunch of chumps.

Nick Bartman, via email


Doing very well from the rental price increases. So no complaints really.

Picakezdi, via FT.com


My wife and I bought our first and only BTL flat at the turn of the millennium as a hedge, not the pursuit of yield or capital gain. It irritates me when I hear part-time landlords whinge about how tough the market has become. Twenty years on, our flat’s doubled in capital value and our tenants have paid off the mortgage. Yes, the yield isn’t super sexy. Yes, the capital value has flatlined for five years. But, if you’re in the BTL business for yield, scale up, otherwise shut up.

FT reader, via email


Rental prices are going to rocket. There are no new buyers.

Level2, via FT.com


I have been investing in property since 2004 and I still believe it is a great opportunity if you do it correctly.

I recently bought a property in March, which is now fully rented, and I am always looking for the next opportunity.

Neil Stewart, via email



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