In the 12 months to April 2025, UK citizens bought around 3,000 homes in the United States, roughly $2 billion worth, an increase of about 233% year on year, and around 73% of those were for investment. UK buyers are now the fifth-largest group of foreign buyers of U.S. residential property. So why the surge? I am British, and I have bought 120+ rental properties in the U.S., so to me it is a no-brainer. But in my daily conversations with UK clients, I keep hearing the same thing: recent changes to UK law and tax have made buy-to-let at home far less attractive. Here is my honest comparison so you can decide for yourself.
Buying
Is Buy-to-Let in the USA a Good Investment?
Why are so many UK landlords now buying in America? A British investor with 120+ U.S. rentals compares UK and U.S. buy-to-let on tax, regulation, yields, and financing, honestly.
David Garner · Co-Founder
Key takeaways
- Section 24 and the new Renters' Rights Act have squeezed UK landlords hard.
- Many U.S. markets offer 8 to 10%+ yields versus 3 to 5% typical in the UK.
- U.S. tax rules allow mortgage interest and depreciation deductions.
- U.S. DSCR loans qualify on the property, and are usually 30-year fixed and amortizing.
- The trade-offs are distance, a new tax and legal system, and currency risk.
Why UK landlords are leaving
For years, buy-to-let in the UK was a popular and profitable way for smaller investors to build wealth. Recent government changes have significantly altered the playing field, and the landlords I speak to have felt the squeeze.
Section 24. The phased restriction of mortgage interest relief, known as Section 24 of the Finance Act 2015, means landlords can no longer deduct all their mortgage interest. You now receive only a 20% basic-rate tax credit on finance costs, so you are effectively taxed on gross rental income. For higher-rate taxpayers, that has drastically cut profitability and made some once-viable properties unprofitable.
The Renters' Rights Act. The UK's landmark rental reform received Royal Assent in October 2025 and became the Renters' Rights Act, and its first major phase took effect on 1 May 2026. Key changes include:
- Section 21 no-fault evictions abolished, so regaining possession now needs a specific legal ground.
- Fixed-term tenancies replaced by periodic tenancies, with tenants able to give two months' notice.
- Stronger tenant rights: landlords cannot unreasonably refuse pets, and cannot discriminate against benefit recipients or families.
- Rent increases limited to once a year and in line with market rates.
- The rent-arrears eviction threshold raised from two to three months, with a longer notice period.
- Awaab's Law, setting timeframes to fix serious hazards, plus a new ombudsman and property portal rolling out in stages over the following years.
These reforms are well intentioned, but they clearly increase the regulatory burden and risk for UK landlords. I recently spoke with a long-time UK landlord who owns 64 properties in the North of England. He is no longer buying at home, he is building a U.S. portfolio instead, and that is far from an isolated conversation.
Why the USA appeals
Given the tightening rules at home, it is no surprise more British investors are looking across the Atlantic. The headline advantages:
- Diversification across a vast country of different local economies, and a different currency.
- Higher yields, especially in the Midwest and Southeast, which means better cash flow.
- More landlord-friendly states, with more balanced eviction and rent rules than the UK's increasingly tenant-centric approach.
- Affordable entry points, letting you acquire more property per pound and achieve stronger rent-to-price ratios.
- Tax advantages like mortgage interest and depreciation deductions, a stark contrast to Section 24.
UK vs USA: a direct comparison
Here is how the two stack up on the factors that matter most to a buy-to-let investor.
| Feature | UK buy-to-let | USA buy-to-let |
|---|---|---|
| Average property price | Higher, especially in London and the South East | Varies widely by state; many markets far cheaper. I buy between $150,000 and $350,000 |
| Typical mortgage LTV | Generally 75% (25% deposit), some lenders want more | Up to 75% on a foreign national DSCR loan |
| Mortgage interest relief | Restricted to a 20% basic-rate tax credit (Section 24) | Mortgage interest is a deductible expense against rental income |
| Rental yields | Typically 3 to 5% (lower in London) | Often 8 to 10%+ in cash-flow markets like the Midwest |
| Purchase tax | Higher stamp duty for buy-to-let (5 to 17%), plus a 2% non-resident surcharge | Low transfer taxes; in Ohio, $1 per $1,000 of value ($200 on a $200,000 home) |
| Depreciation | Not available for residential property | Building value depreciated over 27.5 years; 100% first-year bonus depreciation also available again |
| Eviction | More complex since Section 21 was abolished; needs specific grounds | Varies by state; often faster in landlord-friendly states. In my markets, about 30 to 60 days |
| Tenancy terms | Now periodic; tenants can give 2 months' notice | Fixed 12-month leases are standard; some month-to-month with 30 days' notice |
Financing: UK buy-to-let mortgage vs U.S. DSCR loan
UK buy-to-let mortgages are typically interest-only, which keeps monthly payments low but means no capital paydown, so you rely entirely on appreciation for equity growth (and risk negative equity if the market falls). UK lenders also stress-test affordability, requiring rent to cover 125 to 145% of a higher hypothetical rate, and they underwrite you personally as well as the property.
The U.S. equivalent is the DSCR (Debt Service Coverage Ratio) loan, and I have used around $5.5 million of foreign national DSCR loans building my own portfolio. The key differences for a non-resident:
- No personal income check: lenders do not typically require proof of your income, tax returns, or debt-to-income ratio.
- Property-based underwriting: the loan is judged on the property's DSCR (net operating income versus debt service), with 1.25 or higher often preferred.
- Built for foreign nationals, with 30-year fixed rates widely available.
- Fully amortizing: every payment pays down the balance, so your tenant gradually buys the property for you rather than you relying on appreciation alone.
| Feature | UK buy-to-let mortgage | U.S. DSCR loan |
|---|---|---|
| Underwriting focus | Rental stress test plus personal income and DTI | The property's Debt Service Coverage Ratio |
| Impact on your DTI | Can affect your personal borrowing capacity | No impact on personal debt-to-income |
| Income verification | Requires personal income proof | Little or no personal income verification |
| Loan term | Often 25 to 30 years | Commonly 30 years |
| Rate fixes | Usually 2, 3, or 5-year fixes, then variable | Often 30-year fixed available |
| Foreign-national access | Limited, stricter criteria | Widely available, designed for non-residents |
| Amortization | Typically interest-only | Fully amortizing (principal and interest) |
You can read the full detail in my foreign national DSCR loan guide.
Pros and cons of U.S. buy-to-let
Pros
- Better cash-on-cash returns than the UK in many Midwest markets.
- Diversification into a different economy and currency.
- Faster, clearer eviction in many landlord-friendly states.
- Depreciation can substantially lower your U.S. taxable income.
- Long-run U.S. home-price appreciation has averaged roughly 5% a year, and leverage magnifies your equity growth.
- DSCR loans make financing straightforward for foreign nationals.
Cons
- Distance and time zones mean you rely on a strong local team. I would rather have a 7/10 market with a 10/10 team than the reverse.
- A different legal and tax system, including FIRPTA and estate tax, needs specialist advice.
- Currency risk between the pound and the dollar cuts both ways.
- A real learning curve; you will not become an expert overnight.
- Vetting and building a trusted team remotely takes effort.
For UK landlords feeling the pinch from Section 24 and the Renters' Rights Act, the U.S. buy-to-let market is a genuinely compelling alternative. But it is not a decision to take lightly, do your research, understand the U.S. legal and tax landscape, and partner with people who have done it before.
If you would like to talk it through, you can book a call, or start with my full investment strategy and the step-by-step buying guide.
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Frequently asked questions
Why are UK landlords looking to invest in U.S. buy-to-let?
Recent UK changes, chiefly the Section 24 restriction on mortgage interest relief and the new Renters' Rights Act, have cut profitability and increased the burden on landlords. That is pushing many to look at the U.S. for diversification, more landlord-friendly rules, and potentially higher yields.
How does the UK's Section 24 affect landlords, and how is the U.S. different?
Section 24 restricts UK landlords to a 20% basic-rate tax credit on mortgage interest and taxes them on gross rental income, which can push them into a higher bracket. In the U.S., mortgage interest is a deductible expense against rental income, which can significantly reduce the taxable amount.
What are the key impacts of the UK Renters' Rights Act on landlords?
The Act received Royal Assent in October 2025, and its first phase took effect on 1 May 2026. It abolishes Section 21 no-fault evictions, converts tenancies to periodic, strengthens tenant rights on pets and discrimination, limits rent increases to once a year, and raises the arrears threshold for eviction. Further parts, like the ombudsman and property portal, are rolling out in stages.
What are DSCR loans, and why are they beneficial for UK investors buying in the USA?
DSCR (Debt Service Coverage Ratio) loans are U.S. investment-property mortgages that qualify mainly on the property's income, not your personal income or debt-to-income ratio. That simplifies financing for foreign nationals, and unlike typical UK interest-only buy-to-let mortgages, they are usually fully amortizing with long-term fixed rates.
What are the main advantages of U.S. buy-to-let for a UK investor?
Diversification into a different economy and currency, potentially higher yields and cash flow, more landlord-friendly rules in many states, meaningful tax benefits like depreciation, access to growth markets, and simpler financing through DSCR loans.
What are the main challenges for UK investors buying U.S. rentals?
Managing property from a distance (which makes a trustworthy local team essential), navigating a different legal and tax system including FIRPTA and U.S. estate tax, currency exchange risk between the pound and the dollar, and the learning curve of a new market.
Written by
David Garner
David is co-founder of Cashflow Rentals and a British investor who has personally purchased more than 120 U.S. rental properties as a foreign national since 2016. He helps overseas investors build U.S. rental portfolios remotely, from his base in Brazil.
