By James Crawford • Published 27 June 2026
Here's a number that should give any aspiring landlord pause. We took the average home in nine major UK cities, put a standard 75% mortgage on it at today's rates, rented it at the average local rent, and ran it through the tax system a higher-rate taxpayer actually faces in 2026. In eight of those nine cities, the property loses money every month after tax. Not marginal deals in bad postcodes — the average property, at the average rent. That's what Section 24 has done.
Of nine major cities, a higher-rate (40%) individual landlord with a typical mortgage is cash-flow negative after tax in eight. Only Glasgow stays positive. The table below ranks them best to worst, with the same property held in a limited company shown alongside for comparison.
| City | Avg price | Avg rent (pcm) | Gross yield | After-tax cash flow (higher-rate personal) | Same deal in a limited company |
|---|---|---|---|---|---|
| Glasgow | £184,000 | £1,278 | 8.3% | +£790/yr | +£2,930/yr |
| Manchester | £247,000 | £1,349 | 6.6% | −£1,045/yr | +£1,090/yr |
| Liverpool | £184,000 | £901 | 5.9% | −£1,556/yr | −£221/yr |
| Bristol | £354,000 | £1,883 | 6.4% | −£1,636/yr | +£1,375/yr |
| Edinburgh | £295,000 | £1,425 | 5.8% | −£2,341/yr | −£160/yr |
| Birmingham | £236,000 | £1,088 | 5.5% | −£2,400/yr | −£788/yr |
| Leeds | £244,000 | £1,130 | 5.6% | −£2,422/yr | −£740/yr |
| Sheffield | £222,000 | £922 | 5.0% | −£3,115/yr | −£1,812/yr |
| Cardiff | £271,000 | £1,157 | 5.1% | −£3,431/yr | −£1,748/yr |
Figures are annual cash flow (rounded), excluding capital growth. See the method below.
It comes down to one rule. Since the Section 24 restriction fully landed in 2020, an individual landlord can no longer deduct mortgage interest from rental income before tax. You're taxed on the rent (less running costs, but not interest), and then handed a flat 20% credit on the interest. If your marginal rate is 40%, that 20% credit leaves a 20-point gap — and on a 75%-mortgaged property at ~5% interest, that gap is wide enough to swallow the thin pre-tax cash flow whole.
The cruel part is that the cities with the lowest yields suffer most. Cardiff and Sheffield sit at the bottom not because their rents collapsed, but because their average price has run ahead of rent — a ~5% gross yield simply can't carry a 5% mortgage once Section 24 takes its cut.
Sometimes — not always. A company deducts mortgage interest in full and pays corporation tax (19% up to £50,000 of profit) instead of income tax. That flips Bristol, Manchester and Glasgow back into positive territory and narrows the loss everywhere else. The gap between the two right-hand columns is the Section 24 penalty: in Bristol it's the difference between losing £1,636 a year personally and making £1,375 in a company — a £3,000 swing on one property.
But notice the cities still red in the company column — Cardiff, Sheffield, Edinburgh, Birmingham, Leeds, Liverpool. Where a deal barely cash-flows before tax, no ownership structure rescues it. And companies carry their own costs: higher mortgage rates, £800–£1,500/year of accountancy, and dividend tax when you take the money out. The structure is a tax tool, not a magic wand.
Run your own deal through the numbers
Our free calculator applies the exact Section 24 logic used in this study and shows personal vs limited-company side by side.
BTL Cash Flow & Section 24 Calculator →We applied one identical model to every city, changing only the local price and rent:
Real deals vary enormously by postcode, property type and condition — a well-chosen HMO or a sub-average-price flat can beat these figures comfortably. The point isn't that buy-to-let is dead; it's that the average leveraged deal no longer cash-flows for a higher-rate taxpayer, and you have to actively engineer a deal that does.
For a fuller breakdown of each market — postcodes, yields and local rules — see our city guides for Glasgow, Manchester, Liverpool, Bristol, Edinburgh, Birmingham, Leeds, Sheffield and Cardiff.