Keep a buy to let when its income after tax, plus the growth you honestly expect, beats what you would earn on the cash left after selling it, and sell when it does not.
The comparison that matters is with the cash that would actually reach your account after capital gains tax, selling costs and the mortgage, not with the value of the property.
On the worked example below that is £96,920 from a £250,000 house, and on our assumptions the answer turns on whether the house grows by more than about 0.6% a year. Tax rates and figures are current to 14 September 2026.
In short
- Keep when income after tax, plus expected growth, beats what the cash from selling would earn instead; sell when it does not.
- On the worked £250,000 example, a sale releases £96,920 after capital gains tax, selling costs and the mortgage.
- On that example, the two routes come out equal at price growth of about 0.6% a year.
- From April 2027, property income tax rates rise to 22%, 42% and 47%, up two points from today.
- A capital gains tax bill on a residential sale must be reported and paid within 60 days of completion.
What selling a buy to let costs
Three things come off the sale price before you see any of it, and the largest is usually tax.
For individuals, gov.uk’s capital gains tax guidance sets the rate on gains made from 6 April 2026 at 18% on the part that falls within the basic rate band and 24% above it.
The annual exempt amount for the 2026 to 2027 tax year is £3,000.
The gain on a UK residential property has to be reported and the tax paid within 60 days of completion, so plan for the bill to fall due quickly.
The gain is not simply the sale price minus the purchase price.
Gov.uk lets you deduct the costs of buying, selling and improving the property, including estate agents’ and solicitors’ fees, while normal maintenance such as decorating does not count.
Our guide to capital gains tax on property sets out the rules in force; this piece only applies them.
If you inherited the property, the gain is measured from its value when the person died, which our guide to selling or renting an inherited house covers.
Then the mortgage is repaid from what is left. If your deal carries an early repayment charge, that belongs in this column too, so read your offer before you run the sum.
The last item is who you sell to.
A tenanted property sells to investors, who price the rent, while an empty one can also sell to someone who wants to live in it, which can mean a higher price.
That premium counts on the sell side, but so does the rent you give up while the property is being emptied and the risk that a sale falls through after the tenants have gone.
How the two prices are built is in what your rental is worth to an investor, and the vacant route is covered in our guide to selling a house with tenants.
What keeping it costs from April 2027
Holding has its own tax change coming.
Section 7 of the Finance Act 2026 sets property income rates for the 2027 to 2028 tax year of 22% at the basic rate, 42% at the higher rate and 47% at the additional rate, two points above today’s 20%, 40% and 45%.
Those rates apply in England and Northern Ireland. Scottish taxpayers pay Scottish rates on this income.
Our note on the 2027 landlord tax changes works through the bands.
Mortgage interest is still not deducted from a landlord’s rental profit.
Relief comes instead as a tax reduction which, under gov.uk’s guidance, is the basic rate value, currently 20%, of the lower of the finance costs, the property profits and adjusted total income.
From 2027 to 2028 the Act moves that relief to the property basic rate, so it rises to 22% in the same year the charge rises to 42%.
One detail matters a great deal for this decision.
The same Act raises the savings rates of income tax for 2027 to 2028 to 22%, 42% and 47%, from 20%, 40% and 45% this year.
Interest on the cash from a sale is taxed two points harder as well, so the 2027 change does not on its own make cash look better than property.
Why so many landlords are leaving is in why landlords are selling up in 2026, and how running costs have moved against rents is in HMRC’s figures on landlord costs against rental income.
The hold or sell sums
This example landlord uses round assumptions rather than anyone’s real records, so every number can be checked.
They live in England, pay tax at the higher rate, and bought the house for £180,000 plus £7,500 of stamp duty and legal fees.
It carries an interest only mortgage of £135,000 at 5%, costing £6,750 a year, and lets for £1,250 a month, or £15,000 a year.
Running costs, meaning letting and management, repairs, insurance, safety certificates and an allowance for empty months, are taken at 25% of the rent, £3,750 a year.
An investor would pay £250,000 with the tenant in place, and selling costs are taken at 2% of the price, £5,000. Taking them at 3% instead moves the break-even growth rate described below by less than a tenth of a percentage point.
Selling today, the gain is £250,000 less £5,000 of selling costs, less the £180,000 price and £7,500 of buying costs, which leaves £57,500.
Take off the £3,000 exempt amount and 24% of the remaining £54,500 is £13,080 of capital gains tax. Repay the £135,000 mortgage and the cash released is £96,920.
Keeping it, the taxable rental profit is £11,250, because the interest is not deducted.
This year that is taxed at 40%, which is £4,500, less a £1,350 reduction for the interest, leaving a bill of £3,150 and £1,350 of cash after tax.
From April 2027 it is 42%, or £4,725, less a £1,485 reduction, leaving £3,240 and £1,260 of cash. The 2027 rates cost this landlord £90 a year.
Now compare like with like: £1,260 is 1.3% of the £96,920 that selling would release.
Put that cash on deposit at an assumed 4% before tax, a little above the 3.75% at which the Bank of England held Bank Rate on 17 September 2026, with the next decision due on 5 November 2026.
Assuming the £500 personal savings allowance a higher rate taxpayer gets today continues, they keep £2,459 in the first year after 42% tax. On income alone, selling wins by about £1,200 a year.
Income is not the whole return, because the house keeps its growth and the cash does not. We did not pick a growth rate, because a forecast would decide the answer for you.
Instead we ran both routes over five years, with rent rising at the same pace as the price, interest earned on the cash, 2027 to 2028 rates applied to every year, and the house sold at the end with capital gains tax paid then. The two routes come out equal at price growth of about 0.6% a year.
Total cash after five years if you keep, at 2% annual growth
£124,510
Total cash after five years if you sell now and invest the proceeds
£109,796
Below 0.6% a year, selling wins. Above it, keeping does.
With no growth at all, keeping ends at £103,745, about £6,000 behind selling. Those five-year totals assume rent rises and falls at the same rate as the price, and that each year’s income after tax is banked at the end of the year and earns the same after-tax deposit rate.
Borrowing magnifies losses too. If prices fall 2% a year, keeping ends with £84,523, about £25,000 behind selling.
The break-even moves quickly with the inputs.
| Assumption | Break-even growth |
|---|---|
| Cash returns 3% | about 0.3% a year |
| Cash returns 5% | about 0.9% a year |
| £15,000 of works over five years | about 2% a year |
| Remortgage at 6% (£207 after-tax income) | about 1.2% a year |
The model is simple on purpose. Works are treated as a cost with no tax relief, capital gains tax rates and the exempt amount are held at today’s levels, and the landlord stays a higher rate taxpayer throughout.
It shows the shape of the decision, not your answer.
When selling wins and when keeping does
Keeping is right more often than the income figures alone suggest. A landlord who expects even modest growth, has no large works coming and can carry the mortgage comfortably is, on these numbers, better off holding.
Tax deferral: deferring capital gains tax is part of why keeping wins, because the £13,080 stays in the property until the sale instead of leaving on completion.
The case is stronger still with little or no borrowing. Run the same house mortgage free and the after-tax income is £6,525 a year, 2.8% of the £231,920 a sale would then release, which beats the roughly 2.4% that 4% on deposit leaves after tax, even if prices drift down by about half a percent a year.
Selling also has a cost that only appears if you buy again later, because a new purchase can bring stamp duty and legal fees all over again, as our stamp duty guide for investment property sets out.
Selling is right when the property needs money it will not earn back, when the mortgage is about to refix well above what the rent can carry, when running costs are high, or when you expect prices where you own to be flat or falling.
Push running costs to 35% of the rent in the example and after-tax income falls to £390 a year, with break-even growth of about 1.1%.
It is also right when the cash has a better use than a deposit account. Money that clears other borrowing earns the interest you stop paying, and that saving is not taxed, which can be a higher hurdle than any deposit rate.
And it can be right for reasons no spreadsheet holds, such as too much of your wealth in one house, one tenant or one town.
There is a third route, moving the property into a company, and it has tax costs of its own, set out in our guide to buying property through a limited company.
What this means for your buy to let
Run the test on your own figures in four steps. First, work out the cash a sale would release: the price an investor would pay, less selling costs, less capital gains tax at your rate, less the mortgage and any early repayment charge. Second, work out what the property pays you after tax at the 2027 to 2028 rates, with mortgage interest relieved at 22%.
Third, divide the second figure by the first and set the result against the after-tax return you could actually get on that cash, whether from a deposit or from clearing debt. Fourth, find the price growth that closes the gap, and ask whether you believe it for your street rather than for the country.
Then be honest in both directions. If the growth you need is below anything you would call cautious, keeping is likely the better decision, whatever the headlines about landlords leaving say. If you need growth you would not bet on, or works you have been putting off, selling is likely the better one. This is general information, not advice on your situation, so take independent advice before acting.
The one input you cannot work out alone is the price. Get a free desktop valuation: send us the address, the rent and the tenancy details and you will have an evidence-backed range within 24 hours, yours whether you sell or not.