DSS Select | Property Market Commentary | November 2026
A landlord collects £1,800 a month in rent. The tenant thinks the landlord is making a fortune. The landlord looks at the mortgage statement and wonders where the money has gone.
Meanwhile, the bank receives its interest payment every month.
This is one of the contradictions at the heart of Britain's buy-to-let market.
We regularly hear that landlords are making too much money, tenants are paying too much rent and the government needs to intervene.
There is some truth behind each concern. But what is often missing from the conversation is a basic question: who is actually making money from private renting, and who is carrying the financial risk?
After nearly 30 years working in property, I've seen landlords build successful portfolios. I've also seen landlords struggle to make the figures work.
The difference is rarely as simple as how much rent they collect.
The Illusion of Rental Income
A property generating £1,800 per month produces £21,600 in annual rental income.
On paper, that looks attractive.
But rental income is not profit.
Consider a hypothetical buy-to-let property valued at £350,000, with a £262,500 interest-only mortgage at 5.5%.
The annual mortgage interest alone would be approximately £14,438.
That leaves £7,162 before insurance, repairs, management fees, safety certificates, void periods, service charges where applicable and tax.
Allow £3,000 for those other annual costs, and the landlord has roughly £4,162 remaining before tax.
That's around £347 per month.
The property generates a gross rental yield of approximately 6.2%, yet the landlord's actual cash return is considerably smaller.
For an individual landlord, the tax position can make the picture more complicated. Residential mortgage interest is generally subject to restricted tax relief rather than being deducted in full when calculating taxable rental profit.
And because the mortgage is interest-only, the landlord isn't reducing the amount owed.
Of course, property investment can still provide capital growth. But house prices can fall as well as rise, and selling involves costs.
The mistake is assuming that because someone owns a valuable property, they must be earning a substantial monthly income from it.
Are the Banks the Real Winners?
Banks provide the finance that allows many landlords to purchase properties they could not otherwise afford.
They also take lending risk, face funding costs and must hold capital against potential losses.
So it would be unfair to suggest that every pound of mortgage interest is pure bank profit.
However, the distribution of risk deserves closer examination.
The lender receives contractual interest payments. The landlord remains responsible for repairs, compliance, insurance, tenant issues and the possibility of falling property values.
If the property is empty, the mortgage payment doesn't stop.
If the boiler breaks down, the lender doesn't contribute towards replacing it.
If a tenant falls into arrears, the bank still expects payment.
This doesn't make landlords victims. Borrowing to invest is a commercial decision, and leverage can magnify gains as well as losses.
But it does raise an uncomfortable question.
Have some landlords become so dependent on borrowing that they are effectively managing properties to service debt rather than generate meaningful income?
For heavily mortgaged investors, the answer may increasingly be yes.
Why Tenants Aren't Feeling the Benefit
There is another side to this argument.
Tenants don't receive a discount because their landlord has an expensive mortgage.
They pay rent based on the property, location and prevailing market conditions.
A landlord with no mortgage may charge exactly the same rent as a landlord paying thousands of pounds in interest.
This challenges the idea that higher mortgage costs automatically justify higher rents.
Landlords can attempt to increase rents, but what tenants can afford and what competing properties cost remain important constraints.
At the same time, when borrowing and operating costs rise, some landlords may decide to sell rather than continue letting.
If those homes leave the private rented sector, the effect on rental availability depends on what replaces them and whether other rental homes become available.
That matters particularly to households who cannot yet buy.
Tenants and landlords may appear to be on opposite sides of the argument, but both can suffer when housing supply is inadequate and financing costs are high.
Is Government Policy Making the Equation Harder?
The Renters' Rights Act 2025 introduced major reforms in England from 1 May 2026, including the abolition of Section 21 no-fault evictions and changes to tenancy arrangements, rent increases and possession grounds.
These changes address genuine concerns about housing insecurity.
Tenants should have the confidence to report disrepair without fearing an arbitrary eviction.
Landlords, however, need an effective legal process when they have legitimate grounds to recover possession.
The challenge is not whether tenants deserve protection. They do.
It is whether housing policy considers the combined effect of regulation, taxation, borrowing costs and supply.
No single measure explains every landlord's decision to sell.
Some landlords are leaving because of age or retirement. Others may be releasing capital, responding to poor returns or changing investment strategy.
We should be cautious about blaming one piece of legislation for every property that comes onto the market.
But government should be equally cautious about assuming that private landlords will continue supplying homes regardless of the economics.
What Needs to Change?
First, landlords need to examine real profitability rather than headline rental yields.
A sensible investment assessment should include mortgage costs, tax, repairs, voids, regulatory requirements and a contingency reserve.
If the numbers only work when the property is occupied every day and nothing goes wrong, the investment may be more fragile than it appears.
Second, government needs to consider rental supply alongside tenant protection.
That means increasing the delivery of suitable housing, improving the efficiency of possession proceedings and understanding how different types of landlords respond to policy changes.
The objective should be to encourage responsible long-term investment, not preserve every investor's profit margin.
Third, the industry should reduce unnecessary vacant periods by improving tenant assessment.
This is an area where landlords and tenants can both benefit.
A landlord paying £1,200 a month in mortgage interest loses money quickly when a property sits empty.
Yet suitable applicants may be overlooked because they receive Universal Credit, have unconventional income or do not fit traditional referencing assumptions.
Landlords should assess genuine affordability, rental history and suitability rather than relying on stereotypes.
Widening the applicant pool doesn't mean accepting unacceptable risk.
It means examining the evidence before making a decision.
The DSS Select Perspective
At DSS Select, we believe the debate needs to move beyond landlords versus tenants.
A sustainable private rented sector requires financially viable landlords, secure tenants and fair access to accommodation.
We are particularly interested in how better information and more inclusive assessment can reduce unnecessary barriers.
Our approach encourages landlords to consider applicants on their individual circumstances, including those receiving benefits, while maintaining appropriate affordability and suitability checks.
The DSS Passport concept is part of that thinking: helping applicants present relevant information more clearly and enabling landlords to make better-informed decisions.
It won't solve high mortgage rates or the national housing shortage.
But improving how available homes are matched with suitable tenants is one practical step towards a more efficient market.
Conclusion: Who Is the Rental Market Really Working For?
Banks provide finance. Landlords provide accommodation and accept investment risk. Tenants pay for the homes they need.
All three have legitimate interests.
But when borrowing costs consume much of the rental income, landlords become more cautious, tenants face affordability pressures and the market becomes less flexible.
The answer isn't to blame banks, landlords or tenants individually.
It's to ask whether the system encourages affordable housing, responsible investment and long-term stability.
If a rental property generates income for the lender but little financial security for the landlord or the tenant, we should question whether the model is working as well as it could.
And perhaps that is the debate the housing industry needs to have.
