Rental Property Calculator
Analyse buy-to-let investment returns including gross yield, net yield, cash flow, and annual profit.
What this calculator does
This buy-to-let calculator converts a property listing into the numbers a landlord underwrites on. Enter the purchase price, your deposit, the monthly rent, annual running costs, and a void allowance, and it returns net operating income, the yield the property produces, and the cash return your deposit earns.
Net operating income is rent after voids and running costs but before any mortgage payment, so it describes the property rather than your financing. The yield figure lets you rank properties consistently. The cash-on-cash figure reintroduces your mortgage and shows what your deposit is actually earning, which is where UK buy-to-let economics have become considerably harder in recent years.
When to use it
Use it to screen listings before viewing, with rent taken from current comparable adverts rather than an agent's optimistic estimate. It is also the tool for the deposit question: buy-to-let lenders usually require 25 percent, but going to 35 or 40 percent may be necessary to pass the interest cover ratio test in a low-yield area, and the calculator shows what that extra capital does to your return.
It matters most when deciding whether to keep a former home as a rental after moving. Enter today's value as the price and your equity as the deposit, and the cash-on-cash figure tells you what that trapped equity is earning — often less than a savings account, which is a useful thing to confront before deciding by default.
Understanding the inputs
Purchase price should include the stamp duty surcharge and legal costs in your thinking even though the field takes the price alone, because those are unrecoverable capital. Deposit is typically 25 percent minimum for buy-to-let, higher in low-yield areas to satisfy the lender's stress test.
Monthly rent must come from live comparable listings for the same property type in the same postcode. Annual expenses should include letting agent fees of eight to twelve percent plus VAT, buildings insurance, ground rent and service charge on a leasehold flat, gas safety and electrical checks, and a maintenance allowance — but not the mortgage. Void rate at five percent is a reasonable default in a strong rental market.
How is this calculated?
Monthly Cash Flow = Monthly Rent − Monthly Expenses − Mortgage Payment. Cash-on-Cash Return = (Annual Cash Flow / Down Payment) × 100.
A worked example
Take a £200,000 terraced house with a 25 percent deposit of £50,000 and a £150,000 interest-only buy-to-let mortgage at 5.4 percent, so £8,100 a year in interest. Rent is £1,150 a month and running costs are £3,200 a year.
Gross rent is £13,800, a gross yield of 6.9 percent. A five percent void allowance leaves £13,110, and after costs net operating income is £9,910 — a net yield of about 4.96 percent. Deduct interest and pre-tax cash flow is roughly £1,810, or 3.62 percent on the deposit. The lender's test is comfortably met: £13,800 of rent against stressed interest of £8,250 at 5.5 percent gives 167 percent cover, well above the 145 percent required.
Limitations and assumptions
The biggest omission is tax. Under Section 24, mortgage interest is not deductible from rental profit — you get a 20 percent credit instead — so a higher-rate taxpayer's post-tax return is materially worse than the pre-tax figure shown here. The calculator also excludes the five percent stamp duty surcharge, conveyancing, and any refurbishment needed to make the property lettable.
It ignores capital growth, capital repayment, and capital gains tax on sale, and it assumes rent and costs stay flat. Real risks it cannot model include a tenant who stops paying while possession proceedings run for months, service charge increases on a leasehold flat, cladding or EWS1 issues, and future EPC requirements. Speak to an accountant about the tax position and to a broker about the stress test before committing capital.
Common Questions
- What rental yield should I be aiming for?
- Gross yields of five to seven percent are typical outside London, and three to four percent is common in the South East where capital growth has historically compensated. Net yield after costs is usually two to three percentage points lower. Anything below four percent gross struggles to service a buy-to-let mortgage at current rates.
- What is the ICR stress test?
- Buy-to-let lenders require rent to cover mortgage interest by a margin, typically 125 percent for basic-rate taxpayers and 145 percent for higher-rate, stress-tested at a notional rate of around 5.5 percent. On a £150,000 loan, stressed interest is £8,250, so a 145 percent test needs annual rent of at least £11,963.
- How does Section 24 affect my return?
- Mortgage interest is no longer deductible from rental income. Instead you receive a basic-rate tax credit worth 20 percent of the interest. For a higher-rate taxpayer this is a substantial change — tax is charged on income before interest, so a property with modest positive cash flow before tax can be loss-making after it.
- What stamp duty do I pay on a buy-to-let?
- The standard residential rates plus a five percent surcharge on the whole price for any additional property above £40,000. On a £200,000 purchase that means £1,500 of standard duty plus £10,000 of surcharge — £11,500 in total, which is real capital that must be counted in your return calculation.
- Should I buy through a limited company?
- Increasingly common for higher-rate taxpayers because companies still deduct mortgage interest in full and pay corporation tax rather than income tax. The offsets are higher mortgage rates, company accounting costs, and tax on extracting profits as dividends. It generally favours investors building a portfolio rather than holding one property.
- What are the EPC rules for rentals?
- A property currently needs an EPC rating of E or above to be let, with limited exemptions. Proposals to raise the minimum to C for new tenancies have been repeatedly revised, but the direction is clear. On an older property, budget for insulation, glazing, or heating upgrades that could run into five figures.
- What expenses can I still deduct?
- Letting agent fees, ground rent and service charges, buildings insurance, repairs and maintenance as distinct from improvements, accountancy, and council tax or utilities during void periods. There is also a replacement of domestic items relief for like-for-like replacement of furniture and appliances. Capital improvements are not deductible against income but reduce capital gains on sale.
- How much should I allow for voids and maintenance?
- Five percent for voids is a common starting point, equating to under three weeks empty a year, though a single bad turnover can exceed that. For maintenance, ten percent of rent is a reasonable ongoing allowance on a modern flat and more on an older house, before any planned works on the boiler or roof.
- Does this include capital growth?
- No. It measures income return only — net operating income, yield, and the cash return on your deposit. Capital growth and capital repayment are real but uncertain, and a property whose income does not stand on its own is a bet on house prices rather than an investment in a rental business.
Related calculators
- Cap Rate CalculatorCalculate the capitalisation rate of a property to evaluate rental yield and investment returns.
- Cash-on-Cash Return CalculatorCalculate the annual cash-on-cash return on a buy-to-let or property investment.
- Gross Rent Multiplier CalculatorCalculate the gross rent multiplier (GRM) to quickly compare and evaluate buy-to-let property investments.