Buy-to-let in London can still make sense in 2026, but it’s no longer a straightforward route to easy returns. Rents are high and tenant demand remains strong, yet mortgage costs and new responsibilities mean the right property needs to stand up to careful scrutiny.
If you’re a landlord deciding whether to keep, sell or expand, or you’re considering your first property investment, the honest answer is: it depends on the numbers, your plans and how much risk you’re comfortable taking.
What’s changed?
Rightmove’s Q3 2026 Rental Trends Tracker, published on 15 October, puts the average advertised rent in London at a record £2,825 per month, up 3.2% year on year. Inner London averaged £3,349, with annual growth of 4.0%; Outer London averaged £2,442, up 2.5%.
Those figures describe advertised rents, not guaranteed rent for any individual home. Still, they point to a market where demand is supporting rental income. Available rental listings in London were down 9% year on year, new listings fell 7%, and renter demand rose 6%.
There are also signs that rental income has been growing faster than house prices in many parts of the capital. Benham and Reeves research reported by Property Reporter found that rents outpaced house prices in 26 of 32 London boroughs between January and July 2026. Across London, house prices fell by an average 0.10% a month while rents rose by 0.47% a month.
That could support the case for a long-term landlord. But rising rents alone don’t tell you whether a property investment will make a profit.
Do the yields add up?
Rightmove’s Q3 table puts the average landlord yield in London at 6.1%, up 0.4 percentage points year on year. The Great Britain average was 6.6%.
A yield figure is a useful starting point, not a forecast of your return. It doesn’t account for your mortgage, tax, management costs, repairs, insurance, service charges or periods without a tenant. Your property’s purchase price and rent will also differ from the averages.
Financing deserves particular attention. Rightmove reported an average two-year fixed buy-to-let mortgage rate of 5.34%, compared with 4.16% before the war in Iran began. Its mortgage expert noted that landlords coming off cheaper fixed deals may need to reconsider whether remortgaging or selling is right for them.
A headline yield and a mortgage rate aren’t directly comparable measures of profit. But the figures show why borrowing costs can put pressure on cash flow. A property may attract strong interest from renters and still leave too little income after its costs are covered.
Before you commit, or decide to sell, work through a realistic monthly budget. Include the mortgage payment at the rate you could actually secure, ongoing maintenance, insurance, management, compliance costs and a sensible allowance for gaps between tenancies. If the investment only works under optimistic assumptions, take a closer look.
Are landlords leaving?
There’s real caution in the market, but talk of a mass landlord exit needs context.
In its review of the first four months of the Renters’ Rights Act, the National Residential Landlords Association reported that 22% of landlords sold a rental property in the 12 months to June 2026. That was below the 38% who had previously said they intended to sell.
This doesn’t mean every landlord who stayed has a profitable property. It does suggest that stated intentions haven’t translated into sales on the same scale. Some landlords may have decided to adapt, while others may have different reasons for keeping their properties.
The NRLA also reported UK rental growth of 2.1% in the year to June, below earnings growth of around 4%. That’s a different measure and period from Rightmove’s London advertised-rent figures. It’s a useful reminder that rents have not simply risen without limit: affordability matters, and setting a realistic rent can help attract a suitable tenant and avoid a costly void.
What are the new responsibilities?
The Renters’ Rights Act has already changed how landlords in England manage tenancies. Section 21 has been abolished, rent increases are generally limited to once a year through the required process, and tenants can end a periodic tenancy by giving two months’ notice.
The national Private Rented Sector database begins opening from 15 December 2026. For London properties, the registration window is scheduled to open on 15 July 2027, with a deadline of 14 October 2027. The stated fee is £65 per property, and penalties for non-compliance can reach £7,000. Check the latest official requirements and dates as the rollout approaches.
There may also be future costs associated with energy-efficiency requirements. If your property could need work to meet a higher EPC standard, it’s worth reviewing its current rating and considering what improvements may be needed. The detail and timing of future requirements can change, so don’t treat a projected cost as settled until you’ve checked current guidance.
Our guide to the Renters’ Rights Act and landlord preparations sets out some practical steps for getting your records and property information in order.
Who might it suit?
Buy-to-let may still suit you if you:
- Have a long-term horizon and aren’t relying on a quick resale.
- Have enough equity, or a manageable mortgage, to cope with changes in borrowing costs.
- Are looking for rental income alongside potential long-term capital growth, not a guaranteed return.
- Have budgeted for repairs, compliance and the time involved in being a landlord.
- Have researched the local area and the type of home renters are looking for.
It may be less suitable if your plans depend on high borrowing and very little financial headroom, or if you’re not willing to keep up with legal and property responsibilities. A strong London-wide demand picture can’t remove the risks attached to an individual property.
How can you adapt?
Review your mortgage early. If your fixed rate is ending, speak to a qualified mortgage adviser in good time. Compare the full cost of available options, including fees, rather than relying on an average market rate.
Price the rent realistically. Record advertised rents can be encouraging, but tenants still compare homes and weigh up what they can afford. A well-presented property at a sensible rent may be a better choice than holding out for the highest possible figure and risking a longer void.
Get your records ready. Keep property, tenancy and compliance documents in one place, and check the latest database registration requirements for your property’s location.
Consider how you’ll manage it. Finding tenants, handling rent collection, arranging repairs and staying on top of compliance all take time. A fully managed service may help reduce the day-to-day workload and keep communication moving. At Lyss Homes, our fully managed lettings service includes free Rent Protection and Eviction Cover. You can read more about property management for landlords or our practical guide to the work involved in self-managing.
Is it right for you?
Buy-to-let is still a possible investment in 2026, but the case is strongest when the figures work after costs, your borrowing is manageable and you’re prepared to meet your responsibilities as a landlord. Record rents and tightening supply are useful market signals, not promises about the performance of your property.
If you’re unsure whether to keep, sell or let your home, we’re here to help. Lyss Homes is an independent East London agency, ARLA Propertymark registered, offering hands-on service and honest advice. Request a free rental valuation and we’ll talk through current local demand and whether your property still adds up as an investment.