The complete guide to making one of your biggest financial decisions
Let's break down what really matters (spoiler: it's not just whether house prices go up).
When you sell your property, you unlock equity that can be invested in stocks, bonds, or other assets. When you let it, you're betting the property market (plus rental income) will outperform your other investment options.
It's not just about which asset class performs better—it's about which option gives you better risk-adjusted returns after taxes and costs.
Every pound tied up in property equity is a pound that could be growing elsewhere. The question isn't "will my property appreciate?"—it's "will it appreciate more than my next best option, after accounting for all costs and taxes?"
Four main factors drive whether selling or letting comes out ahead:
UK house prices have historically grown 3-5% per year on average, but this varies hugely by region and time period.
Global stock markets (e.g., a diversified index fund) have returned about 7-8% annually over the long term, while the UK's FTSE 100 has sometimes lagged, achieving around 4-6.5%.
Rental income as a percentage of property value varies by location and property type.
Interest rates dramatically affect letting profitability, especially after Section 24 changes.
Just because UK property has averaged 4% growth doesn't mean your property will. And just because stocks averaged 7% doesn't guarantee future returns. Use our calculator to model different scenarios—optimistic, pessimistic, and realistic.
This is where many people get it wrong. UK tax rules significantly affect whether selling or letting is better.
If you've lived in the property as your main home for the entire period you owned it, you pay zero CGT when you sell. This can save you tens of thousands of pounds.
Even if you let it out later, you still get relief for the period you lived there (plus the final 9 months of ownership).
Rental income is added to your other income and taxed at your marginal rate:
Rental income minus allowable expenses:
Before 2020, landlords could deduct mortgage interest from rental income before calculating tax.
Now: You can't deduct interest. Instead, you get a 20% tax credit on the interest paid. The credit is applied to the lower of: (1) your finance costs, (2) your property profits, or (3) your adjusted total income.
Rental income: £15,000
Minus interest: -£8,000
Minus expenses: -£2,000
Taxable profit: £5,000
Tax (40%): £2,000
Rental income: £15,000
Minus expenses: -£2,000
Taxable profit: £13,000
Tax (40%): £5,200
Minus 20% credit*: -£1,600
Net tax: £3,600
*20% × £8,000 interest (the lowest of finance costs, profits, or income in this example)
That's £1,600 more in tax on the same rental income! For higher-rate taxpayers, Section 24 can make the difference between profit and loss.
Let's look at three real-world scenarios to see when each option wins.
Sale price: £400,000
Minus mortgage: -£200,000
Minus selling costs: -£10,000
CGT: £0 (primary residence)
Net proceeds: £190,000
Invested at 7%/year for 10 years:
£373,700
Monthly rent: £1,800
Minus mortgage: -£900
Minus expenses: -£500
Minus tax: -£300
Monthly cash flow: £100
After 10 years:
Property value: £542,000
Remaining mortgage: £150,000
Reinvested cash: £19,000
Minus CGT on sale: -£35,000
£376,000
Sale price: £250,000
Minus mortgage: -£100,000
Minus selling costs: -£6,000
Minus CGT: -£11,000
Net proceeds: £133,000
Invested at 7%/year for 10 years:
£261,500
Monthly rent: £1,400
Minus mortgage: -£400
Minus expenses: -£350
Minus tax: -£150
Monthly cash flow: £500
After 10 years:
Property value: £339,000
Remaining mortgage: £70,000
Reinvested cash: £103,000
Minus CGT on sale: -£18,000
£354,000
Every situation is different. Use our calculator to model your specific property, mortgage, tax situation, and assumptions about future returns.
Try the CalculatorBeing a landlord is work. Late-night emergency calls, tenant disputes, property viewings, compliance checks, repairs coordination. Many landlords report spending 5-10 hours per month managing their property—even with a letting agent.
UK house prices fell 20% from 2007-2009. Some regions took 5+ years to recover. While property has been a good long-term bet historically, it's not guaranteed—especially over shorter periods.
Property concentration risk is real. All your wealth in one illiquid asset, in one location, in one sector. If that area declines or your specific building has issues (cladding scandal, anyone?), you're stuck. Diversification reduces risk.
Over long periods (10+ years), diversified stock portfolios have been less risky than individual properties. Yes, stocks are volatile short-term, but property has hidden volatility—you just don't see a daily price ticker.
Leverage cuts both ways. Yes, a 75% LTV mortgage gives you 4x leverage on gains. But it also amplifies losses, reduces cash flow (interest payments), and adds risk. After Section 24, highly leveraged buy-to-lets often lose money for higher-rate taxpayers.
When you invest in a global index fund, you own tiny pieces of thousands of companies across the world. You're not "gambling"—you're betting on global economic growth. Meanwhile, one property is a bet on one specific location and building.
Sometimes the "right" financial answer isn't the right overall answer for you. Here are factors to consider beyond the spreadsheet:
Do you lose sleep worrying about tenants trashing your place? Does the thought of emergency repairs stress you out? Mental health has value too. If being a landlord causes anxiety, selling might be worth a financial "loss."
Time spent managing a property is time not spent with family, on hobbies, or earning money elsewhere. If you're a high earner, your time might be worth more than the marginal gains from letting.
Need to move cities for a job? Emigrate? Having property ties you down. Selling gives you geographic flexibility and fewer logistical headaches if your life changes.
Maybe you need the capital for a business, education, or to pay off higher-interest debt. Sometimes unlocking equity serves a more important purpose than maximizing investment returns.
Younger? You have time to ride out market volatility. Nearing retirement? You might prefer the stability and income of a paid-off rental, or the simplicity of a stock portfolio. Your timeline matters.
Was it your first home? Where your kids grew up? Full of memories? That emotional value is real, even if it doesn't show up in a calculation. Sometimes keeping it is worth the financial trade-off.
Our calculator shows you the numbers. But you're the only one who knows your risk tolerance, stress levels, time constraints, and life goals. Use the financial analysis as one input—not the only input—in your decision.
Now that you understand the key factors, run your specific situation through our calculator to see whether selling or letting makes more financial sense for you.
Calculate Your Best OptionFree, no sign-up required, UK tax rules included