Landlord tax holds back buy to let investment

8:59 AM, 26th August 2026, 8 hours ago

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More than half of landlords still regard residential property as a good long-term investment, but very few plan to expand their portfolios.

A survey from Benham and Reeves of landlords in England found 51% remain positive about property as a long-term investment despite increased regulation, while 63% intend to keep their portfolios at their current size over the next year.

Just 4% expect to buy more properties, compared with 13% planning to reduce their holdings and 14% intending to leave the sector altogether.

Profit expectations are also under pressure, with 40% expecting BTL profitability to fall over the next 12 months, against 8% who expect it to rise.

Landlords still back property

A director of the agency, Marc von Grundherr, said: “Despite years of headlines predicting the demise of the private landlord, the reality is that buy to let remains an incredibly strong long-term investment and, importantly, half of landlords themselves still believe this to be the case.

“The issue isn’t that landlords have lost faith in property.

“Almost two-thirds intend to maintain their existing portfolios and, amongst those looking to expand, long-term investment planning is by far the most common motivation.”

He added: “The problem is that the environment in which landlords are being asked to operate has become substantially less attractive.

“Almost eight in 10 believe being a landlord is less attractive than it was five years ago and, as a result, very few are currently prepared to increase their exposure.

“It’s particularly telling that taxation ranks well ahead of the Renters’ Rights Act when it comes to the biggest barrier preventing further investment.

“Regulation has understandably dominated the conversation recently, but landlords have also faced a sustained increase in the financial burden placed upon them and our survey suggests this is having the greatest impact on investment appetite.”

Tax tops landlord concerns

Landlord taxation was the most frequently cited barrier to further property investment, named by 28% of respondents.

The Renters’ Rights Act and wider regulation followed at 15%, with property prices cited by 13%, economic uncertainty by 10% and concerns about problem tenants or rent arrears by 9%.

Stamp Duty was identified by 7% of landlords and mortgage rates and finance costs by 6%.

Asked what would encourage them to buy more properties, 37% chose more favourable landlord taxation, ahead of lower Stamp Duty at 14%, a faster or easier possession process at 12% and greater confidence in the economy was also at 12%.

Buy to let still attractive

More than three-quarters of landlords, 79%, believe being a landlord is now less attractive than it was five years ago, including 52% who say it is much less attractive.

Only 3% believe the proposition has become more attractive during that period.

Among landlords considering further investment, 48% favour traditional residential single-let properties, while 18% would choose properties requiring refurbishment and 11% prefer holiday or short-term lets.

HMOs attracted 5.5% of investment interest, followed by student accommodation at 4%, with corporate lets and new-build properties both at 4%.