Calculate gross yield, net yield, monthly cash flow and return on your deposit — 2026/27 rates.
Landlords holding property personally cannot deduct mortgage interest from rental income. Instead, finance costs attract a 20% basic-rate tax credit, so higher-rate landlords are taxed on rental profit calculated before interest — which is why a geared portfolio can show taxable profit while losing money in cash. Buying an additional property also adds 5 percentage points of stamp duty, and gains on sale are taxed at 18% or 24%.
Buy-to-Let Property Details
£
£
Most BTL lenders require 25% minimum
%
Interest-only BTL: enter 25 yrs then see mortgage row
Results are illustrative and based on repayment mortgage. Interest-only monthly payments would be lower. This calculator does not account for income tax on rental profits, stamp duty surcharge, or capital appreciation. Always take independent financial advice before investing.
How to Use This Calculator
Enter the property purchase price, your deposit, the mortgage rate and term, the expected monthly rent, and your estimated annual costs. The calculator returns gross yield, net yield, monthly cash flow (after mortgage and costs), annual cash flow, and your cash-on-cash ROI based on the deposit invested.
Annual Costs to Include
To get an accurate net yield you need to include all recurring landlord costs:
Letting agent fees — typically 8–12% of rent for full management, or 1–2 months' rent for tenant-find only
Landlord insurance — buildings and contents (plus rent guarantee if required): typically £200–£400/year
Maintenance and repairs — budget 0.5–1% of property value per year
Void periods — realistically budget 2–4 weeks per year of empty property
Accountancy — if using an accountant to file your self-assessment: £150–£500/year
Ground rent / service charge — if the property is leasehold
Interest-Only vs Repayment
Most buy-to-let mortgages are taken on an interest-only basis, meaning your monthly payment only covers the interest and your loan balance does not reduce. The calculator uses repayment by default. To estimate an interest-only monthly payment, multiply the loan amount by the annual rate and divide by 12: e.g. £150,000 × 5% ÷ 12 = £625/month.
Worked Example
Example: £200,000 Property, £50,000 Deposit
Purchase price
£200,000
Deposit (25%)
£50,000
Mortgage (5%, 25 yrs, repayment)
£877/month
Monthly rent
£950
Annual costs
£2,400 (£200/month)
Monthly cash flow
£950 − £877 − £200 = −£127
Gross yield
5.7%
Net yield
4.5%
This example shows slightly negative cash flow on a repayment basis. On interest-only at 5%, the monthly mortgage would be £625, giving cash flow of +£125/month.
Key Tax Considerations
This calculator does not calculate income tax on your rental profit. Key tax points for 2026/27:
Section 24 (finance cost restriction) — you cannot deduct mortgage interest as an expense. Instead, you receive a 20% tax credit on finance costs. Higher rate taxpayers pay more tax than before this rule change.
SDLT surcharge — buy-to-let purchases in England attract standard SDLT plus 5% surcharge on every band. Use our Stamp Duty Calculator to see the full amount.
Capital Gains Tax on sale — residential property CGT is 18% (basic) or 24% (higher rate) with a £3,000 annual exempt amount. You must report and pay within 30 days of completion.
A gross rental yield of 5–6% is generally considered solid for a UK buy-to-let investment. After deducting landlord costs (insurance, maintenance, agent fees, void periods), net yields are typically 3–5%. Yields above 7% are achievable in some northern cities but may carry higher vacancy risk. London prime areas often see gross yields below 4%, with more of the return expected to come from capital appreciation.
Most buy-to-let lenders require a minimum 25% deposit. The rental income also needs to meet the lender's interest coverage ratio — typically 125–145% of the monthly mortgage interest payment. Rates are generally higher than residential mortgages. Some lenders will consider 20% deposit, but this significantly limits your options.
Under Section 24, you cannot deduct mortgage interest as an expense against rental income. You receive a 20% tax credit equal to 20% of your total finance costs. For basic rate taxpayers this is cost-neutral. Higher and additional rate taxpayers are worse off because they pay tax on gross rental income (before finance costs) and then recover only 20% of those costs via the credit.
Buy-to-let and second home purchases in England pay standard SDLT plus a 5% additional dwelling surcharge on every band (increased from 3% to 5% in October 2024). On a £200,000 buy-to-let: standard SDLT is £1,500 and the surcharge adds £10,000, for a total of £11,500. Use our Stamp Duty Calculator for an exact figure.
Key recurring costs: letting agent fees (8–12% of rent for full management), landlord insurance (£200–£400/year), maintenance and repairs (budget 0.5–1% of property value per year), gas safety certificate (£60–£100 annually), electrical inspection (£150–£300 every 5 years), and void periods (budget 2–4 weeks per year). Ground rent and service charges apply if the property is leasehold.
Gross yield = (Annual Rent ÷ Property Value) × 100. Net yield = ((Annual Rent − Annual Costs) ÷ Property Value) × 100. Cash-on-cash ROI = (Annual Cash Flow ÷ Deposit) × 100. Net yield gives a more realistic return picture. ROI on deposit shows the return on your actual cash invested, which can be very different if you are using significant leverage (mortgage).
Written and reviewed by the UKCalc Editorial Team. UKCalc’s calculators and analysis are built and maintained using verified statutory data and official sources. Published by Animateed Limited. About UKCalc · Editorial policy · Methodology
Last reviewed: 9 August 2026 · Rates: 2026/27 tax year unless stated otherwise.
Rates, assumptions and sources
Statutory figures, lender conventions and modelling assumptions — kept separate. Official figures last checked on 2 September 2026.
Mortgage interest relief — individual landlords cannot deduct finance costs from rental income; relief is a 20% basic-rate tax credit instead. GOV.UK: Working out your rental income
Capital gains tax on residential property — 18% within the basic rate band and 24% above, from 6 April 2026. GOV.UK: Capital Gains Tax rates
Income tax 2026/27 — personal allowance £12,570; 20% to £50,270; 40% to £125,140; 45% above. The allowance tapers by £1 for every £2 of income over £100,000. GOV.UK: Income Tax rates and Personal Allowances
UKCalc assumptions — not official figures
The 145% interest cover ratio and the stress rate are lender conventions, not law. Most lenders stress buy-to-let affordability at an assumed rate well above the pay rate, with higher cover ratios for higher-rate taxpayers. Individual lender criteria vary widely.
Void periods, maintenance, letting agent fees and insurance are your inputs. Leaving them at zero produces a yield that no real portfolio achieves.
Assumes an individual landlord holding personally. A limited company structure is taxed entirely differently — corporation tax on profits, full interest deductibility, but tax on extracting the money.
The Section 24 effect. Because finance costs are no longer deductible, a higher-rate landlord's taxable rental profit is calculated before mortgage interest. Highly geared portfolios can show a taxable profit while losing money in cash terms.