Is Buy-To-Let Still Worthwhile for Private Landlords?

When it comes to private landlords, one of the biggest considerations for 2022 is – is it still worth investing in a buy-to-let? Recent years have seen changes to the tax system for the buy-to-let market, and the government have been reducing mortgage interest relief since 2017.

Added to this, some landlords now find themselves more likely to receive a higher tax bill than in previous years too, as the new tax rules require them to declare the entire income used to pay their mortgage when completing their tax return.  These tax changes apply to those who buy as an individual. There are other tax rules applicable to those who buy as limited companies.

Being a landlord isn’t all doom and gloom though, as The Rightmove Rental Trends Tracker for Q2 2022 has revealed that overall, rents have risen by their speediest annual rate for 16 years1. So, all things considered, is buy-to-let still a worthwhile investment?

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What the rise in asking rent means for private landlords

In 2016 the government restricted tax relief on mortgage interest for landlords who hold properties in their own name (not limited companies), while owners of holiday lets still receive the full amount. Since the changes came into effect, private landlords receive a basic rate tax credit of up to 20% of their mortgage interest, so they pay tax based on their revenue and not their profits.

With changes such as this one in mind, the rise in average rents announced by Rightmove for the second quarter of 2022 will be welcome news for many landlords. As any increase in rent for existing tenants must be in line with average rents in the local area, the lift in the national average asking rents outside of London may make it easier for landlords to negotiate a higher yield from their buy-to-let properties.

The report found that since the beginning of the pandemic, the average asking rents outside London has risen by 19%. Pre-pandemic, this level of growth took over 8 years to reach. During the second quarter of 2022, the 3.5% leap in average asking rents has been the second highest in the last decade2. For current landlords looking to increase their rental income, or would-be landlords investing in a buy-to-let, the rise in rents will be a positive nod towards a profitable future. 

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Private landlords and the white paper on rental reforms

The buy-to-let landscape has already been impacted by social changes in recent years, but the white paper on rental reforms – ‘A Fairer Private Rented Sector3'- promises to transform the private rented sector even further. That means private landlords may find themselves facing fresh changes if the White Paper’s proposals come into effect. There is uncertainty around when the reform bill will come into effect, and if it does, exactly what it will include, but it’s a good idea for landlords to prepare where possible.

If the rental reforms go ahead, some of the major changes landlords can expect to encounter include a more robust process if they wish to evict a tenant and finding it more difficult to refuse pets in their property.

The White Paper proposes that Section 21 evictions will be abolished. In a Section 21 eviction, a landlord has the right to evict tenants from the property without giving a reason. Without Section 21 available, landlords will only be able to end a tenancy agreement using Section 8 – which requires them to provide evidence that the contract has been breached. Abolishing Section 21 will offer much-needed protection for tenants but may make a buy-to-let less attractive to would-be investors. Previously, the government has committed to giving landlords at least 6 months’ notice before abolishing Section 21 evictions.

The bill also proposes the cancellation of fixed-term tenancy agreements. This means that private landlords will only be able to welcome tenants on periodic agreements rather than tying them into tenancies for periods such as 6 or 12 months at a time. This change is designed to make it easier for renters to move home as and when they need to. For landlords, this may make securing long-term tenants more challenging, and could raise specific issues for those who operate student lets.

As part of its aim to make it easier for renters to keep pets, the new system means that landlords will not be able to ban their tenants from getting pets, providing that they take out suitable pet insurance.  With many landlords hesitant to welcome pets into their property, this could prove a deterrent from some considering becoming a private landlord.

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How can private landlords prepare for the Renters’ Reform Bill?

With no exact date for any new policies to come into effect, private landlords can still start taking steps to prepare for the changes the bill will bring. The new legislation can be confusing, so it’s important to keep as up to date as possible with the bill itself and any changes it undergoes throughout the coming months.

Having a strong understanding of the forthcoming changes and how they will impact private landlords puts buy-to-let owners in a better position. This will enable landlords to take time to think about their investments and the potential impact of the bill’s changes. Planning is key, so the sooner private landlords have a clear picture of how things will look, the easier it will be for them to adapt to any negative repercussions.

This is a good time for all landlords to think about the future. Buy-to-let properties are a long-term investment, and so it’s crucial that landlords remain one step ahead to ensure they remain viable for years to come. While private landlords wait for updates on the bill’s progress, future-proofing their properties could help to absorb the impact of the changes when they come into effect.

When the bill comes into effect, all private rental properties will need to meet a new minimum standard, similar to the one currently applicable to social housing. Although many landlords keep their properties in good condition, this could mean that some need to invest in updates and improvements to ensure their buy-to-let properties meet new requirements. This could mean investing a lump sum into any rental properties to meet any deadlines for homes to be compliant.

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The challenges of being a landlord

Many landlords may find themselves able to ask for more rent than in previous years, but the current financial landscape may also mean that some buy-to-let owners are facing new challenges as tenants grapple the cost of living crisis.

With the latest warnings that the energy bill price cap could reach over £4000 in 20234, consumers are likely to find themselves under increased financial pressure as they struggle to cover their outgoings. Add rising food prices and inflation to the problem, and many private renters may find themselves in financial difficulty.

In fact, The Financial Fairness Trust have estimated that 16% of households are already facing ‘serious financial difficulties’5. This could have a knock-on impact on the challenges of being a landlord, as tenants experiencing financial difficulty could fall behind with their rent payments. Find out what to do if your tenant stops paying their rent.

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Final thoughts

Any investment is a decision that requires careful research and thought, and becoming a buy-to-let landlord is no different. One of the most important points to consider is that, when done correctly,  buy-to-let can provide a long-term means of income and profit. Factors such as the type of property you buy, where it is and property prices will all have a major impact on the success of your investment, so take time to do your groundwork and understand what you hope to see from your investment.  


  1. The Rightmove Rental Trends Tracker for Q2 2022
  2. The Rightmove Rental Trends Tracker for Q2 2022
  3. A Fairer Private Rented Sector – 16-06-22
  4. com: UK households get fresh warning of energy bills topping £4000 09-08-22
  5. The cost of living crisis affects landlords as well as tenants – 15-07-22

This is a marketing article by Towergate Insurance. The information contained is based on sources that we believe are reliable and should be understood as general risk management and insurance information only. It is not intended to be taken as advice with respect to any specific or individual situation and cannot be relied upon as such. If you wish to discuss your specific requirements, please do not hesitate to contact a Towergate Insurance adviser.

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Landlords insurance from Towergate

At Towergate, we can cover a wide range of rental properties and types of tenants including multi occupancystudents, and local authority placements. Our policies can include cover for loss of rent, loss of keys, accidental damage, alternative accommodation costs, and more.

You can compare prices from a range of leading insurers, as well as add-ons such as landlord home emergency insurance.

Take a look at our landlords insurance page for more information.

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About the author

Alison Wild Bcom Hons MAAT MATT Taxation Technician Commercial Tax Pensions Insurance And Marketing Specialist AuthorAlison Wild BCom (Hons), MAAT, MATT, Taxation Technician is a highly respected industry professional who has been working with and advising SMEs in areas including tax, pensions, insurance and marketing for over 25 years. She is a member of the Association of Accounting Technicians (AAT) and Association of Tax Technicians (ATT) and also has over 20 years' experience as a residential landlord.