We Wanted More Properties. Then We Did the Maths.

On paper, buy-to-let looks brilliant. You buy a house, someone else pays the mortgage, the value goes up, you remortgage and buy another one. Rinse, repeat. Financial freedom by 45. That’s the pitch, anyway.

The reality in 2026? 93,000 landlords quit last year. 41% of the ones still standing are thinking about selling up. We’re not expanding our portfolio either. Let me walk you through why.

The Tax Change That Broke Everything

This is the one most people outside property don’t know about, and it’s the single biggest reason the maths stopped working.

Before 2017, if you had a buy-to-let mortgage, you could deduct the entire mortgage interest as a business expense. So if your rent was £18,000 a year and your mortgage interest was £8,000, you’d pay tax on £10,000 (minus other costs). Simple. Fair. Made sense.

Then George Osborne dropped Section 24 in the 2015 Summer Budget. Phased in between 2017 and 2020, it completely changed how mortgage interest is treated. You can no longer deduct it as an expense. Instead, you get a flat 20% tax credit.

Sounds like a small tweak. It’s not.

If you’re a higher-rate taxpayer (40%), here’s what actually happened. Same £18,000 rent, same £8,000 interest. Under the old system, tax on £10,000 profit at 40% = £4,000. Under the new system, tax on £18,000 at 40% = £7,200, minus 20% credit on £8,000 (£1,600) = £5,600. That’s £1,600 more tax. On the SAME property. With the SAME income. For doing absolutely nothing different.

But it gets worse. Because the full rental income now counts before the interest deduction, it can push you from basic rate into higher rate. So people who were comfortably paying 20% tax are suddenly paying 40% on income that doesn’t actually exist as cash profit. You can literally owe more in tax than you make in rent. Brilliant!

And it’s about to get even worse. From April 2027, the government is proposing separate property income tax rates: 22% basic, 42% higher, 47% additional. Two percentage points above standard rates across the board. I mean… really?

Interest Rates Went Through the Roof

We used to look at our mortgage statements and think “that’s manageable.” Remember when buy-to-let rates were around 3.25%? That was 2021. By summer 2023, they’d shot up to nearly 7%. They’ve come down a bit since then (sitting around 4.7-5.1% for fixed deals in April 2026), but that’s still 1.5 percentage points above where they were. On a £200,000 mortgage, that’s roughly £3,000 a year extra. Just like that.

So the cost of the mortgage went up, and you can’t even properly offset it against tax anymore. Double hit!

Insurance Is Through the Roof Too

Average landlord insurance premium hit £260 in 2024, up nearly 10% in a single year. The average claim cost? A record £6,002. Escape-of-water claims (burst pipes, leaks, the stuff that actually happens in UK houses) averaged £37,792. UK property insurers paid out a record £6.1 billion in 2025. Storms, flooding, ageing housing stock. The premiums reflect the reality.

And if the costs weren’t enough, the legal framework changed too.

The Law Changed. Massively

The Renters’ Rights Act got Royal Assent in October 2025. Section 21 (the “no-fault eviction” route) gets abolished on 1 May 2026. Three weeks from now.

What does that mean in practice? If a tenant stops paying rent, you can still evict them through Section 8, but the threshold went from 2 months’ arrears to 3 months. The notice period went from 2 weeks to 4 weeks. Every single case now needs a full court hearing (the old fast-track paperwork route is gone). Median time from claim to actually getting your property back? 27 weeks. Nearly 7 months. No rent, plus legal costs, plus the property sitting there deteriorating.

And here’s the bit that really winds landlords up. Official advice from Shelter, Citizens Advice, and local councils tells tenants to stay in the property and NOT leave voluntarily before a court order. Seriously. Because if they leave early, they’re classed as “intentionally homeless” and the council won’t rehouse them. The advice isn’t technically “don’t pay rent” but the practical message is: dig in, wait for the court process, take your time. I understand why they do it (the housing crisis is real, nobody wants people on the streets), but it’s another cost that falls entirely on the landlord.

The only real protection against non-payment is rent guarantee insurance. Another premium on top of everything else. The other option is renting through the council directly, but then you lose all control over who lives in your property. No vetting, no choice of tenants. And the amount of nightmare stories I hear from landlords who went the council tenant route… it’s a problem I’d rather avoid entirely.

House Prices Went Flat

Between 2019 and 2022, UK house prices went up 21.7%. That capital growth was the safety net. Even if the monthly cash flow was tight, you were building equity. The property was worth more every year.

Between 2022 and 2025? Up 4.7%. Average UK house price in March 2026: £299,677. London is actually DOWN 1%. South East down 2.2%. The North is doing better (Northern Ireland up 9.7%), but the national picture is basically flat.

So the capital growth play is dead for now. You’re not making money on the monthly cash flow (see above), and you’re not making money on the value going up. What exactly is the point?

For anyone who bought flats specifically, it’s even grimmer.

Why We’re Thankful We Avoided Flats

This is one decision I’m very glad we made. Flats (leasehold, specifically) have been an absolute nightmare for many investors.

The cladding crisis (post-Grenfell remediation) left thousands of buildings with unsafe cladding that costs an average of £1,843 per square metre to fix. Many flats became effectively unmortgageable. You couldn’t sell them. You couldn’t remortgage them. You were stuck, watching the value drop while the remediation bills piled up.

Then there’s service charges. You have zero control over what the freeholder charges. Average service charge in 2020: £1,814 a year. By 2025: £2,405. That’s a 32.6% increase in five years. In the North East, service charges went up 60.9% over the same period. Sixty percent! And this is money that comes straight off your profit. You can’t negotiate it. You can’t shop around. You just pay it.

Some areas saw flat values drop into negative equity territory. Investors who bought at the peak with a mortgage are now trapped: they owe more than the flat is worth, the service charges eat whatever rent comes in, and they can’t sell without taking a loss. I know people in that situation. It’s grim.

We Sat Down and Did the Maths

We sat down one evening, pulled up the spreadsheet, and ran every property through the new numbers. Mortgage at current rates, Section 24 tax treatment, insurance, maintenance estimate, void allowance. The result wasn’t close. The margins that used to make sense… just didn’t anymore.

That was the moment we stopped looking at the next property and started focusing on the ones we already had.

The One Good Thing

Once it’s all set up and running, it IS stable. We’re fortunate that our properties are in prominent, well-positioned areas. Our tenants are reliable, professional people (fingers crossed, touch wood, all the superstitions). We haven’t had problems. The values haven’t shot up, but they haven’t dropped like some areas either.

That stability is worth something. But it’s not a growth engine. It’s a holding pattern.

Wait. What Is the Government Actually Trying to Do?

This is the bit that genuinely confuses me. And I’m not being rhetorical… I actually don’t understand what the end goal is.

The government says there’s a housing crisis. Not enough homes. 1.34 million households on social housing waiting lists. 134,760 families in temporary accommodation (a record). 354,000 people homeless. They set a target of 300,000 new homes a year. They’re building 208,600 and the number is going DOWN. They’ll miss their own target by roughly 460,000 homes this parliament.

So there aren’t enough homes. Fine. We all agree on that.

Now here’s where it gets stupid. Private landlords provide millions of rental homes in this country, roughly 19% of all housing. We’ve been filling the gap that the government couldn’t fill with social housing for decades. And the government’s response to the housing crisis has been to… make it financially impossible for us to continue?

Section 24 took away our ability to deduct mortgage interest. The SDLT surcharge went from 3% to 5%. The Renters’ Rights Act made eviction take 7 months. Insurance premiums keep climbing. Rates nearly doubled at their peak and haven’t come back down. And the result? Tens of thousands of landlords quitting every year. 290,000 rental properties sold out of the sector since 2021. Rents up 24.2% since May 2022 (wages only went up 18.6%). The people these policies were supposed to protect (tenants) are paying MORE for FEWER homes.

Here’s the part that really really gets me. You know who IS exempt from Section 24? Large institutional investors. REITs (Real Estate Investment Trusts) pay zero corporation tax on rental income. Build to Rent corporate operators deduct their mortgage interest in full. The government literally gave them a £1 billion fund in 2012 to get started. Taxpayer money. And some of that taxpayer money likely comes from the extra taxes they’re squeezing out of small landlords like us. So we’re funding our own competition. You couldn’t make it up. George Osborne said he was “levelling the playing field for first-time buyers.” What he actually did was level the playing field for pension funds and corporate landlords while kicking small landlords like us in the teeth.

And the Build to Rent sector? 147,000 completed homes nationally. That’s 3% of the rental market. Nowhere near filling the gap. For every 1 property a new landlord bought in 2024, 5.4 were sold out of the sector. The replacement isn’t there.

I’m not a policy expert. I’m a guy who owns a few rental properties and pays attention to the numbers. But even I can see the cause and effect here. You tax landlords more, they leave. They leave, there are fewer rental homes. Fewer homes, higher rents. Higher rents, more people can’t afford to live anywhere. More homelessness. Every policy designed to help tenants has made things worse for tenants. And nobody in government seems to be connecting the dots.

I don’t know if they planned this or just didn’t think it through. Either way, the £940 million a year in tax revenue from Section 24 might explain a lot.

It’s a Business. Treat It Like One

Here’s the thing politicians seem to forget. Being a landlord is running a business. It’s not a public service. It’s not a charity. We take on risk, we put up capital, we deal with maintenance, insurance, compliance, tax, and tenants. We do it because there’s supposed to be a return at the end.

Take away the return and what happens? The same thing that happens in any business when the profit disappears. People stop doing it. That’s not greed. That’s basic human psychology. Nobody in their right mind takes on six figures of debt, hundreds of hours of unpaid coordination, and the legal risk of a 7-month eviction process… for nothing. You wouldn’t open a restaurant if the government taxed your ingredients at 40% and told you customers could eat for free for 7 months before you could ask them to leave. You’d shut the doors.

That’s what 93,000 landlords did last year. They looked at the numbers, looked at the risk, and made the rational decision. The government removed the incentive, and then acted surprised when people stopped showing up. Cause and effect!

And here’s the kicker. When a business fails, the owner pays. When a landlord makes a bad investment, the landlord loses money. But when government policy fails? Nothing happens. Nobody is held accountable. The officials who designed these policies still have their jobs, their pay packages, their index-linked pensions. Osborne moved on to editing a newspaper. The civil servants who modelled the impact (or didn’t bother) carried on as normal. The Housing Minister says “not all regulation is bad” and moves on to the next press conference. Zero consequences!

The people who made the decisions never feel the fallout. The people who had nothing to do with the decisions pay for all of it.

And the irony? The government is shooting itself in the foot too. More landlords leaving means more tenants displaced. More displaced tenants means more homelessness applications. More homelessness means more temporary accommodation. And who pays for temporary accommodation? The taxpayer. The government’s own policies are creating costs that the government then has to fund. They’re paying to clean up the mess they made.

You don’t need a policy degree to work that one out. You just need to understand that people don’t work for free. And that the people writing the rules never have to live with the results.

Why Staying Small Makes Sense

We wanted to expand. That was the plan. Buy more properties, build the portfolio, let the rental income compound. Classic wealth-building strategy.

But after everything above… it doesn’t stack up anymore. Not for individual landlords, anyway.

The problem with property is it’s intensely physical and human. When the boiler breaks at 11pm in January, someone has to deal with it. When the bathroom needs retiling, you need to get three quotes, coordinate the tradesperson, check the work, pay the invoice. Every single one of those tasks takes human time.

AI can help with some admin (generating tenancy agreements, tracking rent payments, organising documents). Small stuff. But it can’t fix a broken boiler. It can’t inspect damp. It can’t negotiate with a plumber who’s quoting £800 for what should be a £200 job. The hands-on coordination that eats your time is exactly the part that can’t be automated.

And there’s no profit margin left to pay yourself for that time. After the mortgage, the tax (on income that isn’t really profit), the insurance, the maintenance, the void periods… there’s nothing left. You’re working for free. That’s not a business. That’s a hobby that occasionally sends you a bill.

Scaling means more properties, more things breaking, more coordination, more time. But the margin per property doesn’t improve because the costs scale linearly. Unlike software (where I spend most of my time these days), you can’t automate the expensive bits.

So What’s the Play?

For us, staying small. Keep what we have. Maintain the properties well. Keep good tenants happy (the cost of a void month wipes out roughly 8% of annual gross rent in one hit, so tenant retention is everything). Don’t borrow more than you can handle. Don’t chase the “next property” when the numbers don’t work.

If you’re thinking about getting into buy-to-let in 2026, do the actual maths first. Not the YouTube guru version where everything compounds beautifully. The real version, with Section 24 tax treatment, current mortgage rates, insurance that keeps climbing, and an eviction process that takes 7 months. Run the numbers with a 2-month void, a £5,000 repair bill, and a boiler replacement in the same year. If it still works, great. For most people, it won’t.

93,000 landlords worked it out last year. Can’t say I blame them.

Hoi