What are the advantages and disadvantages of being a landlord?
Thousands of buy-to-let (BTL) landlords in the UK have made massive profits over the past few decades, mostly due to rising house prices. But being a landlord isn’t always easy.
With rising interest rates, changes to the BTL tax regime, and increasing tenants’ rights, being a landlord in 2025 can be a challenge. This guide explores the pros and cons.
Advantages of being a landlord
Rental income
If you can make the numbers add up, one of most obvious benefits of being a buy-to-let landlord is the potential for regular rental income.
How much profit you will make depends on by how much your rental income exceeds your mortgage payments and other costs. Obviously, if you own the property outright, it’s a lot easier to make a monthly profit than if you are paying a mortgage. For many people, rental income can act as either a valuable secondary income or, for portfolio landlords, a full-time job.
Rental yield
A rental yield is the revenue you earn – or expect to earn – from an investment, expressed as a percentage of the property or asset value. Calculating your rental yield can help you work out if a particular property will be a worthwhile buy-to-let investment. The rental yield calculator formula is:
Monthly rent x 12 = annual rent
(Annual rent ÷ original price of property) x 100 = rental yield percentage
Capital gains
Over the long term, property values in many areas of the UK tend to increase, especially in sought-after locations. While property markets can be volatile, long-term property appreciation can result in significant capital gains.
Tax deductible expenses
Buy-to-let tax relief started to change in 2017, with changes phased in over several years. The change in tax policy meant the amount of income tax relief landlords can get on residential property finance costs is now restricted to the basic rate of tax.
However, landlords are still allowed to deduct some allowable expenses, including maintenance costs and property management fees.
Long term security
Property investment can serve as a hedge against inflation, diversifying a portfolio and providing a more stable asset compared to stocks or bonds.
Even during periods of market downturns, property has often been seen as a more resilient asset class in the long run.
Growing rental demand
The rental market in the UK is buoyed by a growing population, increasing housing shortages, and shifting social trends, with many younger people either unable or unwilling to purchase homes.
This means demand for rental properties remains high, particularly in cities and areas with strong employment opportunities.
Flexibility
If you already own a property and your personal circumstances change, becoming a landlord can be a viable alternative to selling up.
Perhaps you need to relocate for work, want to move in with a new partner, or take a sabbatical and go travelling for a year? Letting out your property in these circumstances can be a good option.
Professional help
Landlords can outsource a lot of the work of being a landlord to various professionals. You might get a letting agent to find tenants and manage the tenancy, or buy landlord home emergency insurance to deal with some maintenance issues. You can also buy rent guarantee insurance to protect yourself against non-payment of rent and landlord insurance to protect against other risks.
Joining a landlord body such as the National Residential Landlords Association (NRLA) or National Landlord Association (NLA) can help you keep up with any changes in the buy-to-let sector.
Disadvantages of being a landlord
High initial costs
Obviously, to be a landlord you need a property to rent out. If you buy a second property with the intention of letting it out, you’ll need to pay a stamp duty surcharge on top of standard stamp duty rates.
You’ll also need to pay surveying and conveyancing fees, and foot the cost of any renovation or refurbishments necessary to bring the property up to standard.
Getting a buy-to-let mortgage
If you buy a property to let, you need a buy-to-let mortgage. These usually require higher deposits (typically 25%) than residential mortgages, and may come with higher interest rates too.
Mortgage terms and conditions may also limit what you can do with the property and who you can let to (for example, Airbnb may not be allowed).
If you want to let a property owned with a residential mortgage, you’ll need ‘consent to let’ from the lender.
Less tax relief than pre-2017
Since 2017, changes to the tax regime have made it more difficult for landlords to make a profit with buy-to-let.
The changes to the tax system mean landlords are now required to pay income tax on their entire rental income each tax year – with 20% tax relief on mortgage interest payments, regardless of which tax band the landlord falls into.
Finding a tenant
Landlords can use letting agents to find tenants and manage tenancies, but this will come at a cost.
If you find tenants yourself, it’s wise to thoroughly check them out including carrying out a credit check and affordability assessment. You’ll need to set up an Assured Shorthold Tenancy (AST) agreement.
In England, landlords must conduct ‘Right to Rent’ checks to ensure tenants have the right to live in the UK. If you let to someone who is living in the UK illegally, you can be fined up to £1,000.
Understand landlord responsibilities
Landlords need to keep up with an ever-changing list of responsibilities. These include keeping the tenant’s deposit in a tenancy deposit scheme, having a current Energy Performance Certificate (EPC) and gas safety certificate for the property, and installing smoke and carbon monoxide detectors.
If the property is deemed a HMO (house in multiple occupation) you may need to meet additional obligations and also pay to get a licence from your local council.
Property upkeep and maintenance
As a landlord, you’ll be responsible for maintaining the property. This will include plumbing, electrics, heating and hot water. If you provide appliances such as a washing machine or fridge, you’ll need to keep these in working order too.
You’ll need to be prepared to deal with maintenance emergencies such as burst pipes or broken boilers. Landlord insurance or landlord home emergency insurance can help with this.
Cost commitments
Being a landlord comes with ongoing costs, including mortgage repayments, maintenance costs and insurance. These will all eat into the profit you make and, in some cases, could mean you make a loss on a monthly basis.
If you need to pay for major repairs – a new boiler, for example, – you’ll need to make sure you can afford this.
If you decide to sell your buy-to-let property, this might incur a capital gains tax bill.
Bad tenant risks
Bad or unreliable tenants can turn being a buy-to-let landlord into a nightmare. If your tenant stops paying the rent, you’ll need to go through certain legal processes to get the money owed and/or evict them from the property.
In other situations you may find you have let your property to tenants who cause issues with the neighbours, damage your property, or engage in criminal behaviour.
The Renters’ Rights Bills
The Renters' Rights Bill is currently making its way through parliament and aims to balance the rights of tenants and landlords. The bill includes abolishing ‘no-fault’ evictions under section 21 of the Housing Act. This will make it more difficult for landlords to evict bad tenants.
The bill will also limit rent increases, end fixed-term assured tenancies (all tenancies will become periodic), prohibit discrimination against tenants on benefits or with children, and allow renting with pets.
Although a positive move for tenants, some landlords feel the Renters’ Rights Bill will make buy-to-let riskier for landlords.