Buy-to-Let Mortgage UK 2026
Buy-to-let remains popular despite significant tax and regulatory changes. With the right property and mortgage it can still generate reliable income and long-term capital appreciation.
How Buy-to-Let Mortgages Differ
| Feature | Residential | Buy-to-Let |
|---|---|---|
| Minimum deposit | 5–10% | 25% typically |
| Assessment basis | Personal affordability | Rental income coverage |
| Interest rates | Lower | 0.5–1.5% higher |
Rental Coverage Requirement
Lenders require rental income to cover 125% to 145% of the mortgage payment at a stressed rate of typically 7 to 8%. On a £200,000 mortgage at 7.5% stress rate, monthly interest is £1,250. At 145% coverage, rent must be at least £1,813 per month.
Key Tax Changes Affecting Buy-to-Let
- Mortgage interest relief: No longer deductible at marginal rate — replaced by 20% basic rate credit only
- Stamp Duty surcharge: Additional 3% on buy-to-let purchases
- Capital Gains Tax: 18% (basic rate) or 24% (higher rate) on sale profits
Is Buy-to-Let Still Worth It in 2026?
For higher-rate taxpayers the maths are much harder than pre-2015. For basic rate taxpayers and limited company structures with high-yield properties (6%+ gross yield), it can still work. Low-yield properties in expensive areas are very difficult to make profitable.
Always take specialist tax and mortgage advice before purchasing investment property.