Buy-to-Let vs the Stock Market: Have You Actually Done the Maths?
Strip away the noise and most salaried people in the UK have two realistic engines for changing their financial position over a decade: property or the stock market. Unless an inheritance is on its way, where you'll be in ten years is largely decided by how you use one or both. Britain's cultural default is bricks. The default deserves an audit.
Buy-to-let's unromantic arithmetic
Start with the entry fee. Since 31 October 2024, buying an additional property in England or Northern Ireland carries a 5% stamp duty surcharge on top of standard rates (Scotland's ADS is 6%; Wales runs its own regime). On a £250,000 flat, the surcharge alone is £12,500 before ordinary stamp duty — nearly a year of gross rent gone on day one.
Now the running numbers, with an illustrative example. That £250,000 flat lets for £1,100 a month: £13,200 a year, a 5.3% gross yield. Then subtract letting agent fees, insurance, maintenance, void months, and remember Section 24: individual landlords can no longer deduct mortgage interest from rental income — only a 20% basic-rate credit. For a higher-rate taxpayer with a mortgage, net yield can land a long way below the brochure number. None of this makes buy-to-let a bad idea. It makes it a business — one that deserves a spreadsheet, not a feeling.
The other corner: paper, not bricks
The stock market's version of rent is the dividend. The FTSE 100's forward yield for 2026 sits around 3.4%, with a record £88 billion in payouts forecast — though ten companies account for about half of that, a concentration worth knowing. Zoom right out: long-run studies covering 1900–2024 put global equities at roughly 5.2% a year above inflation. Inside a Stocks & Shares ISA, dividends and gains are tax-free. No tenants, no boilers, no voids — but daily prices and the stomach they require.
Not apples to apples — and that's the point
Property offers leverage and rent you can touch; it also concentrates your wealth in one postcode with one tenant. Shares offer liquidity and diversification; they also reprice in front of you every day. The honest comparison isn't "which is better" but "which set of risks and work do you actually understand and want?"
Our take
Run both sums for your numbers before choosing — most people never do. Our bias: for someone starting from a salary, the ISA route wins on entry cost, diversification and hassle, and the 5% surcharge has made the property side meaningfully harder to justify. But a well-bought property in a market you know deeply can still out-earn a lazy portfolio. The sin isn't picking either engine; it's picking one on folklore.
Sources & further reading
- Zoopla, the 5% surcharge explained
- GOV.UK, higher SDLT rates on additional dwellings
- AJ Bell, FTSE 100 dividends in 2026
- Cambridge Judge, 125 years of asset returns
Educational content only — not financial or tax advice. Tax rules differ across the UK and depend on individual circumstances. Figures checked July 2026. Capital at risk.