Easy Money? Not Anymore! How Government Policy Has Squeezed Small Landlords

Easy Money? Not Anymore! How Government Policy Has Squeezed Small Landlords

 

Five years after questioning whether being a landlord was ever easy money, I revisit the changing fortunes of Britain's private rented sector and ask whether the rewards still justify the risks.

 

Whatever Happened to Easy Money?

 

Back in August 2021, I wrote a blog entitled "Easy Money Not Anymore", challenging the perception that landlords simply sit back, collect the rent and watch their properties increase in value. Having spent over 30 years as a landlord and more than 20 years working in residential lettings and property management, I've seen first-hand the work, financial commitment and risks involved in property investment. Landlords who bought neglected properties, renovated them, sacrificed disposable income and spent weekends carrying out repairs certainly didn't make their money sitting on the sofa. But there was a time when buy-to-let offered attractive rental returns, relatively accessible mortgage finance and substantial capital growth. Those who invested during the 1990s and early 2000s often benefited enormously.

 

Fast-forward to 2026, and the landscape couldn't be more different.

 

Section 24 – Where Things Started Going Wrong

 

In my opinion, one of the biggest turning points came in 2015, when Conservative Chancellor George Osborne introduced Section 24, restricting mortgage interest tax relief for individual landlords.

 

Previously, mortgage interest could generally be deducted when calculating taxable rental profits. The changes, phased in between 2017 and 2020, replaced this deduction with a basic-rate tax reduction.

 

For higher-rate taxpayers with mortgages, the consequences could be substantial. A landlord might receive £24,000 in annual rent, pay £14,000 in mortgage interest and £4,000 in other allowable expenses, leaving just £6,000 before tax. Yet under Section 24, their taxable property profit before the finance-cost tax reduction would be £20,000.

 

How can a landlord be taxed on a figure so far removed from the money actually left in their pocket?

 

Add the additional Stamp Duty surcharge on investment properties, subsequently increased to five percentage points under Labour in 2024, and the financial barriers become even more apparent.

 

More Regulation, More Costs, More Risk

 

Taxation is only part of the story.

 

Today's landlords face an ever-growing list of responsibilities involving property safety, electrical inspections, energy performance, deposit protection, licensing and tenancy legislation.

 

The Renters' Rights Act 2025, with its principal reforms introduced in May 2026, has brought further changes, including the abolition of Section 21 and the transition to assured periodic tenancies.

 

I'm all for decent housing standards and protecting tenants from irresponsible landlords. But there's a difference between sensible regulation and creating an environment where smaller landlords feel overwhelmed by the cost, complexity and potential consequences of getting something wrong. Here in Wandsworth, additional property licensing requirements have only added to that burden for affected landlords.

 

What was once a relatively straightforward investment has become an increasingly complicated business.

 

And for someone with just one or two rental properties, the financial rewards may no longer justify the responsibility.

 

Small Landlords Out, Corporate Landlords In?

 

Here's where I believe the bigger picture becomes particularly interesting. Successive governments have struggled for decades to build enough homes to meet demand, yet private landlords have become an increasingly convenient target for taxation and regulation. Meanwhile, the Build to Rent sector, backed by institutional investors, pension funds and large corporate operators, continues to expand.

 

These organisations have access to substantial capital, professional management teams, economies of scale and corporate ownership structures. Unlike individual landlords, companies are not subject to Section 24 in the same way.

 

Now, I have nothing against corporate investment. If these organisations build additional homes and provide professionally managed accommodation, that's welcome. But unnecessary government intervention in the private rental sector has squeezed out the smaller independent landlords and made it more difficult for tenants to find properties at affordable rents.

 

The world is becoming increasingly corporate, and the independent landlord risks becoming another casualty of that transition.

 

Are Landlords Finally Voting With Their Feet?

 

Evidence suggests that many landlords are reconsidering their future. The Government's 2024 English Private Landlord Survey found that 31% of landlords planned to reduce their portfolios over the following two years, including 16% intending to leave the sector entirely. Some landlords who bought decades ago may have substantial equity and little mortgage debt. Others, particularly those with highly leveraged properties, face much tighter margins. And when you factor in maintenance, compliance, taxation, potential rent arrears and the possibility of lengthy possession proceedings, selling up can become an attractive alternative.

 

Easy Money? Those Days Are Long Gone.

 

When I wrote my original blog in 2021, I argued that the days of easy money for landlords were already behind us. Five years later, that argument has only become stronger. Successive governments have introduced policies that have made buy-to-let more expensive, more regulated and, for some landlords, considerably less profitable.

 

Meanwhile, larger corporate investors are expanding their presence in the rental market, raising questions about the future role of smaller independent landlords. I don't believe buy-to-let is finished. Property can still be a worthwhile long-term investment, particularly for landlords with low borrowing costs and well-managed properties. But the days of buying a property, collecting the rent and relying on capital appreciation to deliver attractive returns are long gone.

 

So, five years after writing my original article, my conclusion remains the same.

 

Easy Money? Not Anymore!

 

And perhaps the question landlords should now be asking is: "Is it worth it anymore?"

Thinking of Selling or Reviewing Your Buy-to-Let Investment?

 

At Lets Find A Home, we understand the challenges facing landlords because we have decades of experience in both property investment and residential lettings. Whether you're considering selling your investment, reviewing your rental returns or looking for professional property management, we can help you assess your options. We cover Wandsworth, Putney, Southfields, Earlsfield and surrounding areas of South West London.

 

Read my original August 2021 article, "Easy Money Not Anymore", to see how the market has changed over the past five years.