Wealth Management
Exiting The Buy-to-Let Market in 2025-26 And What To Do With The Proceeds
The maths behind buy-to-let property investments has shifted in recent years, and for many, investing in rented property no longer a worthwhile risk.
Since April 2020, BTL investors are no longer able to deduct mortgage expenses from rental income to reduce tax bills. Mortgage rates for BTL loans still hover around 5%, so borrowing eats into returns and taxpayers now only get a 20% tax credit on mortgage interest, where previously they were able to claim full relief. Since April 2025, additional property purchases face higher SDLT rates, ranging from 5% to 17% depending on the price band. Furthermore, the Renters’ Rights Bill is expected to scrap Section 21 evictions and give tenants stronger protections.
It comes as no surprise therefore, that many landlords are already leaving this market or considering leaving in response to all of these challenges. With the Autumn Budget due on 26 November 2025 which may bring even more landlord taxes, including talk of National Insurance on rental income, now is a good time for BTL landlords to plan an exit strategy on their own terms if thinking of doing so.
If You Sell, What Happens Next?
Selling will release capital but will also trigger capital gains tax on any increase in value above £3000.
- Residential property CGT rates are 18% (basic-rate band) and 24% (higher/additional).
- UK residents must report and pay within 60 days of completion if CGT is due.
- Keep records of improvement costs, fees and dates to evidence your calculation.
To help mitigate this, time the sale with your wider finances in mind (such as your income in the tax year, your spouse or civil partner allowances, or use of losses). If you’re rolling proceeds straight into another strategy, line this up ahead of completion.
What To Do With the Proceeds
Option 1: Stay In or Re-Enter Buy-to-Let
Buy-to-let still offers the comfort of a tangible asset, and over time rents may keep rising. With leverage, the returns can look attractive in the right market. But the drawbacks are mounting: higher financing costs eat into margins, SDLT on purchases is punitive, current tax legislation keeps the tax burden heavy for taxpayers, and regulatory obligations are only growing.
Once you account for repairs, voids, insurance, compliance, and the time involved, many landlords find their true net yield is no longer worth the effort.
Option 2: Set up a Managed Investment Portfolio aiming for a yield of around 7% p.a.
Instead of tying your money up in bricks and mortar, you could construct a professionally managed portfolio designed to pay a regular income. Think of it like spreading your money across lots of different baskets: e.g. shares that pay dividends, government and corporate bonds, infrastructure investments, and even listed property funds.
You could aim for a 7% annual yield, which is in keeping with historic expectations for property investors, However, this would not be guaranteed and the value of your investments can go down as well as up. The benefits are clear though:
- Your money is spread around, so you’re not relying on one tenant or one building.
- You can sell a portion whenever you need cash, instead of having to offload a whole property.
- No tenants, broken boilers or legal red tape to deal with.
- It can be structured effectively using tax-efficient investments.
Think of 7% as a ballpark figure, not a promise. The actual return will depend on your attitude to risk and the performance of the investments within your portfolio over a period of time.
How Best Advice Will Help You Decide
Selling property doesn’t need to be the end of your financial journey. With expert wealth advice, we can help guide you to build a clear, tax-effective plan for the next step.
We’ll help you:
- Design a tax-efficient investment plan that balances your income, growth and security needs.
- Plan for the future with estate and inheritance considerations built in.
- Keep your strategy under regular review, so it adapts as markets and your circumstances change.
Think of us as your long-term partner, constantly making sure your money works harder for you without the stress of managing it all yourself.
Get in touch today to plan the next chapter in your financial journey.