Buy-to-Let vs Stocks & Shares ISA: What £60,000 Could Become in 30 Years
A worked example: £60,000 into a leveraged buy-to-let versus a Stocks and Shares ISA over 30 years, with the tax rules and where each one wins.
By Firoz Khan|27 September 2026|14 min read
People run the numbers on a buy-to-let listing constantly: deposit, mortgage payment, expected rent. Far fewer run the same £60,000 through a Stocks and Shares ISA and compare the two side by side, over the same 30 years, with the same rigour. This article does that: one lump sum, two paths, full workings.
The saver in this example is 33, already owns their main home, and has £60,000 to put to work: either as the deposit and buying costs on a £170,000 buy-to-let, or invested through a Stocks and Shares ISA. Thirty years later, one path leaves them a bit ahead — but not for the reason the headline number suggests.
The answer in 30 seconds
£302,900
Buy-to-let, net of all costs and tax, after selling at year 30
£344,500
Stocks and Shares ISA, fully sheltered, after 30 years
£41,500
Final gap in the ISA’s favour
That’s a far narrower gap than a simple "shares beat property" headline suggests — and for most of the 30 years, the property is actually ahead. It’s the Capital Gains Tax and selling costs at the point of sale that swing the result back to the ISA. Change the rental yield or the growth rate and the result flips.
Watch the video version
YouTubeWhy £60,000?
£60,000 is deliberately chosen because it is close to the scale of deposit many UK households now assemble for a property purchase: the average first-time buyer deposit was £61,090 in Halifax’s 2024 data, and the average first-time buyer is now 33.9 years old, roughly two years older than a decade ago.
Those statistics are context only. Our investor is not a first-time buyer: they already own their home, and the buy-to-let in this example attracts the additional-property rate of Stamp Duty Land Tax. An ordinary first-time buyer purchasing their only home would not pay that surcharge.
The assumptions
Two scenarios, same starting capital, same 30-year horizon. Every input below is either sourced (current UK tax rules, official statistics) or an explicitly stated modelling assumption — the two are kept separate throughout this article.
Buy-to-let assumptions
- Property price
- £170,000 (Preston, used as an illustrative example)
- Deposit
- 25% (£42,500)
- Mortgage
- £127,500, interest-only
- Mortgage rate
- 4.7% (ASSUMED — matches the UK Finance Q1 2026 average new BTL rate)
- Monthly rent
- £875 (£10,500/year gross — a 6.18% gross yield, below the UK Finance Q1 2026 average of 7.21%)
- Property price growth
- 3% a year
- Void period
- 3 weeks a year
- Maintenance
- 1% of current property value a year
- Letting agent (ASSUMED, fully managed)
- 10% of rent collected
- Insurance and compliance (ASSUMED)
- £300 a year
- Council tax during voids (ASSUMED)
- based on a typical Band C bill, charged only for the 3 void weeks
- Buying costs
- £4,500 (legal, survey, mortgage/product fees)
- Selling costs at year 30 (ASSUMED)
- 1.5% of sale price
- Salary (ASSUMED, held flat throughout)
- £44,000
Illustrative assumptions only. Rent, growth and mortgage-rate assumptions are not guaranteed and will not hold exactly for 30 years.
- Starting capital
- £60,000
- Investment
- a low-cost global equity index tracker
- Investment return (ASSUMED)
- 6% a year, after fund and platform fees
- Distribution yield (ASSUMED)
- 1.8% a year on the unsheltered portion, until fully wrapped
- ISA allowance
- £20,000 a year (current rules)
- ISA subscriptions
- £20,000 in year 1, then £20,000 at the start of each of the following tax years until the whole amount is sheltered
Illustrative assumptions only. Investment returns are not guaranteed and will vary from year to year in reality, unlike the smooth annual figure used here.
Where the £60,000 goes upfront
| Metric | Buy-to-let | Stocks and Shares ISA |
|---|---|---|
| Starting cash | £60,000 | £60,000 |
| Property deposit | £42,500 | — |
| Stamp Duty Land Tax | £9,400 | — |
| Legal, survey and product costs | £4,500 | — |
| Cash left over | £3,600 | — |
| Sheltered in an ISA immediately | — | £20,000 |
| Outside the ISA initially | — | £40,000 |
The £40,000 outside the ISA doesn’t sit there for three years untouched: up to £20,000 more can move into the wrapper at the start of each new tax year, so the whole amount is normally sheltered within about three tax years.
The Stamp Duty calculation
Because this is an additional property, the higher rates apply: 5% on the portion up to £125,000, then 7% on the portion from £125,001 to £250,000 (rates unchanged since the October 2024 increase from 3% to 5% on top of the standard bands).
SDLT on a £170,000 additional property
For comparison, an ordinary first-time buyer paying £170,000 for their only home would pay no SDLT at all, since the first-time buyer nil-rate band covers this price.
Where the rent actually goes
Rent received (after the 3-week void) comes to £9,894 in year one. Here’s what happens to every £100 of it, reconciled to the actual assumptions above rather than rounded to convenient percentages:
- Mortgage interest: £60.57
- Maintenance: £17.70
- Letting agent: £10.00
- Insurance and compliance: £3.03
- Council tax during the void: £1.14
- Income tax impact: £2.47
- Net cash profit: £5.10
That’s £504 of after-tax cash profit in year one, on £127,500 of borrowed money and £42,500 of the investor’s own — a modest cash return on its own. The property’s appeal here isn’t the rent. It’s explained in the leverage section below.
The Section 24 tax effect
Since April 2020, an individual landlord can’t deduct mortgage interest from rental income the way they deduct ordinary running costs. Instead, qualifying finance costs generate a basic-rate (20%) tax reduction, applied after the tax on rental profit is worked out. This is the residential finance-cost restriction (often called "Section 24") and it doesn’t apply to companies, only individuals.
On a £44,000 salary, here’s what that means in year one:
Year 1 income tax, with and without the property
| Metric | Salary only | Salary plus rental profit |
|---|---|---|
| Rent received | — | £9,894 |
| Allowable expenses (maintenance, agent, insurance, council tax) | — | £3,153 |
| Taxable rental profit | — | £6,741 |
| Total income | £44,000 | £50,741 |
| Income tax before the finance-cost reduction | £6,286 | £7,729 |
| Finance-cost tax reduction (20% of mortgage interest) | — | £1,199 |
| Tax actually due | £6,286 | £6,530 |
| Extra tax caused by the property | — | £244 |
The extra tax is disproportionate to the profit because £471 of it is pushed over the 2026/27 higher-rate threshold (£50,270), taxed at 40% instead of 20%. Mortgage interest doesn’t reduce the taxable profit itself, only the tax bill, at a flat 20%, regardless of the landlord’s actual tax rate.
That extra tax grows every year as the modelled rent rises: by year 30, it’s a few thousand pounds a year, not a few hundred, because the growing rental profit pushes further into the higher-rate band each year while the personal allowance and tax bands are held flat in this model (see the caveat below). Summed over all 30 years, the property’s income tax bill comes to roughly £57,600 — the single largest modelled cost of ownership.
A caveat on 30 years of tax rules
Tax rules will almost certainly change over a 30-year period — rates, thresholds, reliefs and allowances have all moved repeatedly over the last three decades and there’s no reason to expect the next 30 years to be different. This model applies today’s stated rules and thresholds throughout, unchanged, purely to make the two routes comparable on a like-for-like basis. Treat every long-run figure in this article as illustrative, not predictive.
Council tax during voids
An empty rental property will usually remain liable for council tax — there’s no automatic exemption just because nobody’s living in it — although individual councils can apply their own discounts or short exemptions in some circumstances, and long-term empty homes can eventually attract a premium rather than a discount. This model assumes the standard rate applies for the 3 modelled void weeks each year, with no discount, since treatment genuinely varies by council.
Why property stays competitive for so long: leverage
The investor puts in £60,000 in total (deposit plus buying costs), but owns the economic exposure to the full £170,000 property — the other £127,500 is the lender’s money. When the property grows at 3% a year, that growth applies to the whole £170,000, not just the £60,000 the investor actually put in.
That’s why the property closes the gap on the ISA through the middle years of this model, and even moves ahead of it: a geared asset grows faster in cash terms than an ungeared one, for as long as the asset is appreciating. The reverse is just as true. If prices fall instead of rising, the same leverage multiplies the loss against the investor’s much smaller equity stake — leverage is not free return, it’s a multiplier in both directions.
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The regulatory backdrop: the Renters’ Rights Act
For England, Section 21 "no-fault" eviction was abolished from 1 May 2026 under the Renters’ Rights Act 2025. Most assured tenancies became periodic rather than fixed-term, landlords need a specific legal ground to regain possession, and rent increases follow a formal process that tenants can challenge if the proposed increase is above market rent.
None of this makes property inherently a better or worse investment — it changes the practical experience of holding it: how quickly a landlord can regain possession, and what’s involved in raising rent. These rules apply in England; Scotland and Wales have their own separate tenancy regimes.
The 30-year progression
The property overtakes the ISA around year 13 and stays ahead until the point of sale — where the tax bill on selling brings the final result back the other way. Figures below show the running position each period: the buy-to-let column is equity (property value minus the mortgage) plus banked, after-tax rental cash, before any sale.
Modelled value by year (before sale)
| Metric | Buy-to-let net position | Stocks and Shares ISA |
|---|---|---|
| Year 1 | £34,200 | £63,600 |
| Year 5 | £59,500 | £80,300 |
| Year 10 | £98,400 | £107,400 |
| Year 15 | £146,500 | £143,700 |
| Year 20 | £205,200 | £192,400 |
| Year 25 | £276,300 | £257,400 |
| Year 30, before sale | £361,800 | £344,500 |
From year 15 onward the buy-to-let’s running position is ahead of the ISA — but this is before selling costs and Capital Gains Tax, which only apply once the property is actually sold (see below). The ISA figure needs no such adjustment: it’s already fully tax-sheltered.
Selling the property
At year 30, the modelled property is worth £412,600 (3% annual growth, compounded). Selling it triggers costs the running total above doesn’t yet include:
Capital Gains Tax at sale
Subtract the current annual exempt amount of £3,000 and £219,500 of gain is taxable. UK residential property gains for a higher or additional-rate taxpayer are taxed at 24% — this model assumes the investor is in that band at the point of sale, which gives Capital Gains Tax of roughly £52,700. Gains on residential property normally need to be reported and paid within 60 days of completion where tax is due, not at the following Self Assessment deadline.
After the mortgage is repaid, selling costs and Capital Gains Tax paid, and the 30 years of banked after-tax rental cash added back in, the buy-to-let’s final net position is £302,900 — a drop of nearly £59,000 from the £361,800 running total the moment before sale.
The final comparison
Total tax and cost breakdown
Kept separate, because they’re not the same thing: taxes are paid to the government; costs are the price of running the property or holding the investment.
- SDLT: £9,400
- Income tax attributable to the property, over 30 years: £57,600
- Capital Gains Tax at sale: £52,700
- Total modelled tax: £119,700
- Mortgage interest, over 30 years: £179,800 (£5,993 a year, flat, interest-only)
- Maintenance, letting agent, insurance and void-period council tax combined, over 30 years: roughly £131,000
- Selling costs: £6,200
The ISA side, by contrast, pays essentially nothing: about £24 of dividend tax in total during the brief period before the whole amount is ISA-sheltered, and no platform or fund charges beyond what’s already built into the 6% return assumption.
The risks on both sides
Neither side of this comparison is risk-free.
- Global equity markets can fall a long way, and have: large, multi-year drawdowns have happened repeatedly and will happen again.
- Selling equity investments during a downturn locks in the loss and can permanently damage a 30-year return.
- Returns are never as smooth as a flat 6% a year; some years will be sharply negative, others sharply positive.
- A growth-focused ISA portfolio doesn’t generate guaranteed monthly cash — though a fund that distributes income will pay dividends, it’s not the same as rent landing every month regardless of market conditions.
- Property carries its own risks: tenant arrears, void periods, unexpected repairs, concentration in a single asset and location, mortgage-rate risk at remortgage, regulatory change, poor liquidity, and large transaction costs on both buying and selling.
A rental property can produce spendable monthly cash directly. A growth-oriented equity portfolio generally requires selling units or receiving distributions to produce spendable cash — a real, practical difference in cash flow, separate from which one ends up worth more.
When property performs better
The base case uses a 6.18% gross yield and 3% annual growth, both below UK Finance’s Q1 2026 national averages (7.21% yield, and house-price growth that has often exceeded 3% over multi-year periods). Run the same model with more favourable, still realistic, assumptions and the result changes substantially:
Sensitivity: alternative yield and growth assumptions
| Metric | Buy-to-let | Stocks and Shares ISA |
|---|---|---|
| Base case (6.18% yield, 3% growth) | £302,900 | £344,500 |
| 8% gross rental yield | £378,000 | £344,500 |
| 5% annual property growth | £623,700 | £344,500 |
| 8% yield and 5% growth combined | £728,500 | £344,500 |
The ISA figure is held constant across scenarios since none of these changes touch the equity assumption. A higher yield or faster growth (or both) makes the leveraged property comfortably ahead — the base case in this article was deliberately conservative on both counts.
What about buying through a limited company?
A company isn’t subject to the individual finance-cost restriction — it deducts mortgage interest in full, like any other business expense. Corporation tax applies instead of income tax, at 19% while profits stay under £50,000 (comfortably true here throughout the holding period), rising through marginal relief toward the 25% main rate above £250,000, which is what a large one-off gain like a property sale is likely to trigger in the year it happens.
- Personal ownership (as modelled above): £302,900
- Company ownership, profits retained inside the company, nothing extracted: £343,300
- Company ownership, then the whole amount extracted as a single dividend on top of a £44,000 salary: £212,800
Held inside the company, this route beats personal ownership — it avoids Section 24 entirely. Extract it all in one go, though, and most of it lands in the additional-rate dividend band (39.35% from April 2026), which wipes out the advantage and leaves the investor worse off than owning it personally. There’s no blanket answer here: a company can be the stronger structure for someone who doesn’t need the money out, and the weaker one for someone who does.
What actually determines the result
The worked example lands narrowly in the ISA’s favour, but that outcome is a product of the specific assumptions used, not a universal rule.
Property becomes more competitive when:
- rental yield is higher than this example’s 6.18%
- property price growth is higher than 3% a year
- financing is cheaper than 4.7%
- operating costs (agent, maintenance, void periods) are lower
- the ownership structure is more tax-efficient for that investor’s circumstances
- leverage stays manageable rather than becoming a source of stress
An ISA becomes more competitive when:
- equity returns are strong
- rental yields are low relative to the property price
- mortgage costs are high
- transaction and tax costs (SDLT, CGT, selling costs) are significant
- the tax shelter has time to compound, largely untouched
- liquidity and flexibility matter more than a fixed, illiquid asset
This is an explanation of what drives the model’s sensitivity, not a personal recommendation — the right answer for any individual depends on their own yield, financing, tax position and appetite for a large, illiquid, leveraged asset.
Methodology
All figures are nominal; inflation is not modelled separately, so every growth rate in this article should be read as a cash, not a real-terms, figure.
- Rent is assumed to grow at the same 3% a year as the property value, from year 2 onward.
- Maintenance is recalculated each year as 1% of the then-current (grown) property value, not the original purchase price.
- The letting agent fee, insurance/compliance cost and council tax void charge are explicit modelling assumptions, not given figures — flagged throughout as ASSUMED.
- The mortgage is interest-only throughout: the £127,500 balance never reduces and is repaid in full from the sale proceeds.
- Salary (£44,000) and the personal allowance and tax bands are held flat (frozen) for all 30 years, purely to keep the two routes comparable — not a forecast that tax policy will stand still.
- The ISA return (6% a year) is applied after fund and platform fees; no separate fee is deducted on top.
- Dividends on the unsheltered portion are taxed each year at the ordinary (basic-band) dividend rate after the £500 dividend allowance; the model checks this against the investor’s available basic-rate headroom.
- ISA migration assumes up to £20,000 moves from the unsheltered pot into the ISA at the start of each new tax year, until the whole amount is sheltered (around year 3 in this model).
- Capital Gains Tax at sale is calculated on sale price minus selling costs minus the original purchase price, buying costs and SDLT (all added to the cost base), less the £3,000 annual exempt amount, at the 24% higher/additional rate.
- Selling costs are assumed at 1.5% of the sale price.
Sources
UK Finance: Buy-to-Let Lending data (Q1 2026 average gross yield 7.21%, average new BTL rate 4.71%). GOV.UK: SDLT rates for additional properties, the residential finance-cost restriction, Capital Gains Tax rates and allowances, reporting and paying CGT on UK property within 60 days, tax on dividends, council tax on second homes and empty properties, and the Renters’ Rights Act guidance. Halifax, via Lloyds Banking Group: first-time buyer deposit and age data.
Educational, not advice
This article models one illustrative scenario to show how leverage, tax and costs interact over a long holding period. It is not personal financial or tax advice, and it doesn’t account for your own income, tax position, risk tolerance or circumstances. Figures are illustrative; investment returns are not guaranteed; tax treatment depends on individual circumstances and will change over time.
Related reading: The Real Cost of Being a Landlord, Overpay Your Mortgage or Invest?, What Is an ISA?, Index Funds Explained, and Choosing an Investment Platform.
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