A landlord who wants cash out of a portfolio has two routes: sell something, or borrow against it. They are taxed completely differently, and the gap is often large enough to decide the question on its own.
What selling costs you
Dispose of a rental property and you have a chargeable gain, taxed at 18% within the basic rate band and 24% above it for 2026/27, after an annual exempt amount of just £3,000. Where tax is due, you must file a UK Property Disposal return and pay within 60 days of completion — completion, not exchange.
On a property bought for £150,000 and sold for £300,000, with £10,000 of allowable costs and no private residence relief, the gain is £140,000. For a higher-rate taxpayer that is roughly £32,900 of CGT, plus agency and legal fees, payable within two months. You also lose the rent permanently.
What refinancing costs you
Borrowing is not a disposal. Draw £75,000 out of the same property through a remortgage or further advance and there is no CGT, no 60-day return, and you keep the asset and the income. The cost is interest, arrangement fees, valuation and legal work — and a higher monthly payment.
For a company landlord, the interest is fully deductible against rental profit. For an individual, finance costs are restricted to a basic-rate tax reducer under section 24, which is why the arithmetic increasingly favours companies on geared portfolios.
The ceiling on what you can actually release
This is where plans meet reality. Buy-to-let borrowing is limited by interest cover, not by the equity in the property.
Take a property worth £300,000 letting at £1,250 a month. At a typical limited company stress — 125% cover at around 5.5% — the maximum loan works out at roughly £218,000. For a higher-rate individual landlord, where cover requirements are commonly nearer 145%, the same rent supports closer to £188,000.
So the equity you can release is the difference between that stressed maximum and your existing balance — not the difference between the valuation and your existing balance. Landlords consistently over-estimate this.
Two levers help: a five-year fixed rate, which many lenders stress at the pay rate rather than a notional higher figure, and top-slicing, where a lender allows surplus personal income to support a shortfall in rental cover. Both widen what is achievable; neither is universal.
Portfolio landlords: the whole portfolio is assessed
With four or more mortgaged buy-to-lets you are a portfolio landlord under the PRA’s standards. The lender assesses aggregate loan-to-value and aggregate interest cover across everything you own, together with a property schedule, an asset and liability statement and cash-flow projections. Pulling the maximum out of one property can therefore block a later application on another. Plan the portfolio, not the property.
Second charges, where a remortgage does not work
If the existing loan carries an early repayment charge, or sits on a rate you do not want to lose, a second charge raises money behind the existing lender without disturbing it. Rates are higher, and the first lender’s consent is needed, but on a cheap legacy rate the maths often still wins.
When selling is still the right answer
Refinancing is not automatically better. Sell when:
- The property will not stress at any sensible loan — low yield relative to value, which is common in London and the South East.
- Significant capital expenditure is due, such as an EPC C retrofit before the October 2030 deadline, that will not be recovered in rent or value.
- The asset is a genuine problem — short lease, cladding, persistent voids, a structural issue.
- You are basic-rate and the gain is modest, so the CGT cost is lower than years of extra interest.
- You want out of the sector, in which case interest cover is not the question.
And remember the gain is stacked on top of your income for the year, so the split between 18% and 24% depends on your other income — and on whether the property is jointly owned, since each owner has their own allowance and bands.
Run it properly
Get a CGT computation from your accountant and a realistic borrowing figure from a broker, then compare the two over your intended holding period. The answer is usually clear once both numbers are on the same page — and it is frequently not the one the landlord assumed.
Want to know what your portfolio will actually release? Send us a schedule and we will run the cover calculations.
Related services
Most buy-to-let mortgages, and some forms of commercial, bridging and development finance, are not regulated by the Financial Conduct Authority. Your property may be repossessed if you do not keep up repayments on a loan secured against it. Giles Finance is authorised by the Financial Conduct Authority (No. 726857) to transact regulated mortgages. Giles Finance is a trading style of Giles Finance & Consultancy Services. This article is general information, not advice.