Is it worth renting out a house? What UK landlords need to know

The question of whether renting out a house is worth it has become more complex in recent years. Tax changes, increased regulation, rising mortgage rates, and the compliance demands of the Renters' Rights Act have all shifted the calculation for many landlords. For someone considering letting a property for the first time, whether they have inherited a house, are moving to a new home and considering letting the old one, or are thinking about a purpose buy-to-let acquisition, the honest answer requires looking at all the numbers, not just the headline rent.

The income side: what a rental property can earn

Gross rental income is straightforward to estimate. Look at comparable properties in the same area on Rightmove and Zoopla to understand the achievable monthly rent. Use the August rental yield calculator to convert that into an annual yield percentage relative to the property's value.

The gap between gross rent and net income after costs is where the real assessment begins.

The cost side: what most new landlords underestimate

The costs of renting out a house that are easy to overlook include:

Safety and compliance certificates. A gas safety certificate is required annually (approximately £60–£120). An EICRevery five years (approximately £150–£300). An EPC (approximately £60–£120, valid for ten years). Smoke alarms and carbon monoxide alarms must be fitted and tested. These are not optional extras, they are legal requirements with fines for non-compliance.

Landlord insurance. A standard home insurance policy does not cover a property being let to tenants. Specialist landlord insurance typically costs £200–£500 per year depending on the property.

Maintenance and repairs. Budget for 5–10% of annual rental income for routine maintenance. Older properties, those with boilers approaching end of life, or those with any known issues will likely require more.

Void periods. Even well-let properties have occasional void periods between tenancies. Budget for at least one to two months of lost rent per year as a conservative allowance.

Management time or agent fees. If using a letting agent, expect 10–15% of monthly rent for full management. If self-managing, the time commitment is real, estimate two to four hours per month per property on average, with spikes around tenancy renewals, inspections, and maintenance events.

Tax: the calculation that catches many new landlords out

Rental income is taxed as part of your total income. Your property profit, gross rent minus allowable expenses, is added to any salary, pension, or other income and taxed at the relevant band.

For landlords with a mortgage, Section 24 means that mortgage interest is no longer deductible as an expense. Instead, you receive a 20% tax credit. For basic-rate taxpayers, this is broadly neutral. For higher-rate taxpayers, the effective tax position is significantly worse than before 2017, you pay 40% on profit that includes the interest cost, then recover only 20% of the interest as a credit. Use the August rental income tax calculator to model your realistic after-tax return before deciding.

For a comprehensive overview of how rental income is taxed, see our guide on how rental income is taxed in the UK.

The regulatory reality

The Renters' Rights Act has significantly changed the regulatory environment. Fixed-term tenancies have been abolished; all tenancies are now periodic. Section 21 no-fault evictions are gone, recovering possession requires relying on statutory grounds, which involves a court process if the tenant does not leave voluntarily. These are not insurmountable, but they do mean that the ease of exit from a tenancy that many landlords previously relied on no longer exists.

Landlords also need to comply with the Decent Homes Standard and register on the national PRS database when it launches. The compliance burden is real and growing.

So is it worth it?

For a property with no mortgage, strong rental demand, and a landlord who takes compliance seriously, renting out a house can still be a worthwhile source of income and long-term capital growth. The net yield after costs and tax needs to be compared against what else you could do with the capital and currently, that comparison is less favourable than it was five years ago.

For a highly leveraged property in a lower-yield area, held by a higher-rate taxpayer, the arithmetic is genuinely challenging. The Section 24 impact, combined with higher mortgage rates, means that many landlords in this position are generating positive gross cash flow but negative after-tax returns.

The honest answer is: run the numbers properly before deciding. The August rental cash flow calculator and rental income tax calculator together give you the data you need to make an informed decision rather than relying on a back-of-envelope estimate of headline yield.

Also see: Rental yield · Buy-to-let · Section 24 · Allowable expenses · Void periods · Landlord insurance · Gas safety certificate · EICR · Renters' Rights Act

Disclaimer: This article is intended for general informational purposes only and does not constitute legal, financial, or professional advice. Landlord and tenant law is subject to change, and the information in this article reflects the position at the time of writing. You should always seek independent legal or professional advice before taking any action in relation to your property or tenancy.