London Buy-to-Let in 2026: A Landlord’s Practical Guide

If you are weighing up a buy-to-let purchase in London this year, the ground has shifted. The Renters’ Rights Act 2025 reshaped the tenancy landscape from 1 May 2026, mortgage pricing has eased from its 2025 peaks, and yields vary more widely across the capital than many landlords assume. At IREIS Properties, we spend our days helping investors read these signals before they commit.

This guide pulls together what a London landlord actually needs to know in mid-2026: where the rental returns sit by zone, how the new tenancy rules change day-to-day management, why an increasing number of investors hold property through a limited company, and what current mortgage costs look like.

Key Takeaways

• Outer-borough London yields typically run well ahead of prime central, but figures are approximate and subject to market conditions.

• Section 21 ended on 1 May 2026; all tenancies are now periodic and possession runs through Section 8 grounds.

• Individual landlords get a 20% tax credit on mortgage interest, not a deduction — a key reason many use a limited company.

• Buy-to-let fixed rates have eased in 2026, though lenders caution the trend may slow.

What You’ll Learn

Yields by zone

How returns differ between central and outer London, and why.

The new rules

What the Renters’ Rights Act means for managing a tenancy.

Ownership structure

When a limited company makes sense for a landlord.

London Rental Yields in 2026

Yields across the capital span a wide range. In prime Zone 1 to 2 locations, gross yields commonly sit around 3.5% to 4.5%, with net returns lower once costs are stripped out. Move into the outer boroughs and a well-bought, well-managed property can deliver materially higher gross figures — East Ham, Thamesmead, Stratford and Tottenham have featured among the stronger-performing postcodes in 2026 surveys. Rightmove data put the average London gross yield at roughly 5.7% by mid-2025, below the UK average but reflecting the capital’s higher capital values. Figures are approximate and subject to market conditions, and a headline yield never guarantees a return.

The Renters’ Rights Act in Practice

The biggest structural change for landlords arrived on 1 May 2026, when Section 21 “no-fault” evictions were abolished. Assured shorthold tenancies have converted to periodic assured tenancies, and possession now runs solely through the Section 8 grounds, with a stated reason required. The mandatory rent-arrears threshold rose from two to three months, landlords cannot use the sale or moving-in grounds during the first 12 months of a tenancy, and four months’ notice applies in those cases. None of this makes London buy-to-let unworkable — but it rewards landlords who choose reliable stock and manage professionally. IREIS Properties works with clients to focus on well-built new-build homes that attract stable, long-term tenants.

Should You Buy Through a Company?

One of the most common questions IREIS Properties hears from landlords is whether to hold property personally or through a limited company (often an SPV). The pivot point is usually tax. Since the phasing-in of Section 24, individual landlords can no longer deduct mortgage interest as an expense; instead they receive a 20% basic-rate tax credit. For higher- and additional-rate taxpayers, that materially reduces the relief compared with the old regime. A company, by contrast, can deduct finance costs in full and pays Corporation Tax on net profit. A company structure carries its own costs and complications, so this is firmly a question for a qualified accountant.

“A strong headline yield means little if the structure, the tenancy and the tax treatment behind it are wrong — get those right first.”

Mortgage Costs Right Now

Buy-to-let borrowing has become more affordable through 2026. As of early June, the best five-year fixed buy-to-let rate sat around 3.93%, with three-year fixes near 4.17%, while limited-company five-year products were closer to 5.49%. Several major lenders, including The Mortgage Works and HSBC, cut rates across their buy-to-let ranges in recent weeks. Lenders caution that the downward trend may slow or reverse, so rates quoted today should always be confirmed with a broker before you budget.

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Sources: Portico London rental yields 2026 outlook. Rightmove Rental Trends Tracker Q4 2025 (Jan 2026). GOV.UK Implementing the Renters’ Rights Act 2025 roadmap (2026). HomeOwners Alliance Best Buy-to-Let Mortgage Rates (9 June 2026). Nationwide / The Mortgage Works rate announcement (2026). Rates are subject to change; consult a qualified UK tax adviser.