Is buy-to-let still worth it for dentists in 2026?

Introduction

It’s fair to say there’s a strong culture within UK dentistry of owning buy-to-let property, whether by design or as 'accidental' landlords who have acquired properties along the way.

While this preference for bricks and mortar remains common, the investment landscape for residential landlords has changed, with tax, regulatory and market developments affecting returns, risk and long-term profitability.

I’ve certainly found that for a number of dentists who already have a lot on their plate, Rachel Reeves’ recent budgetary changes feel like the final nail in the coffin for their time as a landlord.

Costs and challenges of residential property

Over the last year, several factors have combined to make the traditional buy-to-let model less attractive for many smaller, individual investors.

These include:

• Higher ongoing tax on rental income

The 2025 Autumn Budget confirmed a 2% increase in income tax applied to rental profits from April 2027, meaning landlords will pay up to 22% (basic), 42% (higher) or 47% (additional) on rental profits.

• Stamp Duty Land Tax (SDLT) increases and property purchase costs

Since April 2025, the threshold from which SDLT applies has reverted to £125,000 and the additional property surcharge on buy-to-lets and second homes has risen from 3% to 5%. These changes significantly increase upfront costs when acquiring new properties.

• Capital Gains Tax (CGT) on property sales being higher than expected

CGT rates charged on gains from residential property sales remain elevated (up to 24% for many taxpayers), eating into long-term capital growth.

• Renters’ Rights Act and regulatory burden

From 1 May 2026, the Renters’ Rights Act will bring the largest overhaul of landlord/tenant law in a generation. This includes the abolition of ‘no-fault’ evictions, restrictions on rent increases and new compliance requirements – all of which can increase landlord risk and administrative burden.

• Stagnating house prices

While we saw a post-pandemic boom, house prices across some areas of the country have failed to rise over the last couple of years – due in part to the high cost of borrowing and rising inflation.

Together, these changes can squeeze net rental yields, increase costs and dissuade many smaller landlords from continuing in the residential market.

Tax treatment depends on your individual circumstances and may be subject to change in the future.

A stress check for dentists

For dentists juggling demanding clinical roles and busy personal lives, residential property investment can feel like a second job. Tenant management, void periods, compliance requirements and unpredictable cash flow can result in added stress and distraction, especially when you factor in:

• Tenants' rights increasing
• Tax eating into overall investment returns
• Rising operational and compliance costs
• Capital tied up in investments that aren’t readily accessible

With this in mind, many are starting to see their returns looking less competitive when compared to alternative investment opportunities.

Why consider commercial investments?

If you're considering selling a buy-to-let property, one alternative use for the sale proceeds could be commercial investments.

Following a property sale, it's common for a significant amount of cash to end up sitting in bank accounts earning little interest and gradually being eroded by inflation.

We all know we can maximise our pension options, but what if you require the cash in the short term? Investing some of the proceeds from a property sale could allow your capital to grow over the medium to long term, without the ongoing management and involvement that property ownership often demands.

How commercial investments can work as an alternative

• Designed for business funds

Commercial investment accounts allow your company (such as a dental practice or property Special Purpose Vehicle) to invest surplus cash into professionally managed funds, rather than leaving it sitting in a business bank account.

• Different levels of risk

You can choose from a range of investment options, from more cautious approaches to those focused on long-term growth. This means your investments can be matched to how much risk you’re comfortable taking and what you want the money to achieve.

• More flexibility

Unlike buy-to-let property, commercial investments don’t involve tenants, repairs or compliance issues. While investing is best suited to longer-term plans (typically five years or more), money can usually be accessed if needed, without the delays and costs associated with selling property.

• Growth over time

Any income generated by investments can be reinvested, allowing your money to grow year after year. Over time, this can have a powerful effect on overall returns.

Please remember that the value of your investments can go down as well as up, and you may get back less than you put in.

Things to consider

If increasing tax, tighter regulation and reduced returns are making buy-to-let feel less rewarding, it may be worth reviewing whether property still plays the right role in your overall plan.

For some dentists, buy-to-let continues to work well – particularly where borrowing is low and the portfolio is well-managed. For others, selling property and reinvesting the capital may provide a better balance of return, flexibility and peace of mind.

The key question isn’t whether property or investments are "better", but whether your current approach:

• Still supports your financial goals
• Matches your attitude to risk
• Fits with the time and energy you want to spend
• Works alongside your wider tax and retirement planning

Seeking professional advice can help you understand your options, assess the impact of selling or keeping property and ensure any surplus cash is structured in a way that supports your long-term plans.

Please note most buy-to-let mortgages are not regulated by the Financial Conduct Authority (FCA).

Time to rethink your investment strategy?

At Wesleyan Financial Services, our approach starts with understanding what matters most to you. Our Specialist Financial Advisers can help you review your current position and build an investment plan that fits your wider financial strategy and attitude to risk.

To explore your options in more detail, book an appointment today. Advice charges may apply.