Investment Property Calculator UK 2026

Buy-to-Let Calculator (UK 2026)

Enter your deal numbers and update assumptions live. This calculator is for planning and educational use, not regulated tax advice.

Section 24 model: mortgage interest is not fully deductible for individual landlords and is instead limited to a 20% tax credit. The calculator shows this impact separately.

How the investment property calculator works

A strong buy-to-let decision starts with clear definitions. Investors often compare two deals by headline rent alone, but that misses the difference between gross yield, net yield, and true post-tax cash return. Gross yield is useful for quick market screening because it can be calculated in seconds. Net yield gives a better operating picture because it subtracts costs. Cash flow after tax tells you whether the property actually pays you each year after finance and tax pressure. In 2026, where many landlords still face tighter margin conditions than in the previous low-rate cycle, separating these layers is essential.

This page calculates results in a transparent sequence. It first annualises rent, then removes voids, then applies operating costs. That produces a pre-finance operating figure that can be used for yield and tax modeling. Mortgage costs are then applied based on the type you choose. Interest-only will usually show stronger short-term cash flow, while repayment often shows lower annual cash surplus because principal repayment is a cash outflow. For individual ownership, Section 24 is applied by calculating income tax on profit before finance costs and then giving only a 20% tax credit on mortgage interest. This can produce a visible gap between accounting profit and real take-home cash.

The model includes total return as well, because cash flow alone does not represent the full investment picture. A property can have average income return but still perform acceptably when capital growth is included, and the reverse can also be true. In other words, a decision should not be based on one metric. The calculator outputs gross yield, net yield, cash ROI, and total return side by side so you can test scenarios quickly and avoid single-number bias.

Core equations used

• Gross yield = annual rent / property value.
• Net yield = (rent - costs) / property value.
• Cash flow before tax = rent after voids - operating costs - mortgage payments.
• Section 24 individual tax = (taxable rent profit × tax rate) - (mortgage interest × 20%).
• Total return = yield + capital growth.

When you screen deals at speed, use gross yield first and then move quickly to net yield and cash flow. Typical yields around 4-7% can still produce weak outcomes if costs are underestimated or tax effects are ignored. Conversely, a modest yield can still be attractive if financing terms are strong, management is efficient, and the local area has persistent rental demand.

Worked UK example with realistic assumptions

Suppose you buy a property for £250,000 and let it for £1,250 per month. Gross annual rent is £15,000, so headline gross yield is 6.00%. At first glance, that appears healthy. But once you include a void allowance of 4 weeks per year, effective rent drops because no rent is collected during that period. If you also include agent fees at 10% of collected rent, insurance at £300 per year, maintenance at 1% of property value, plus service and other recurring costs, net operating income is materially lower than headline rent.

Now layer in finance. If mortgage balance is £187,500 at 5.5% interest-only, annual interest is £10,313. At this point, the property may still look acceptable pre-tax depending on cost assumptions. The bigger shift happens when personal tax is applied under Section 24. Individual taxable profit no longer allows full mortgage interest deduction in the same way as older tax treatment. Relief is now constrained to a 20% credit, which can increase effective tax paid by higher-rate landlords and reduce the amount of cash left at year end.

If you rerun the same numbers under a limited company route, finance costs are generally treated differently for corporation tax purposes. In many practical cases, this can reduce annual tax drag. However, that does not automatically make the company route universally better. You still need to consider setup cost, annual compliance cost, lending rates available to companies, and how you plan to draw money personally. The right route is strategy-specific, not slogan-specific. The calculator therefore shows individual and company outputs side by side so your decision can be evidence-led.

This worked method is the reason the page includes both a simple yield view and a deeper cash flow view. A deal can look strong when judged on gross yield alone but fail once you include realistic financing and tax. Using consistent assumptions across all candidate properties also prevents emotional decision-making when you visit viewings and helps keep your underwriting discipline consistent.

Annual cost assumptions every UK landlord should model

Cost assumptions are the main source of forecasting error in buy-to-let underwriting. For many investors, the rent estimate is close to reality but running costs are understated. That creates false confidence and can turn a marginal deal into a cash drain. The strongest approach is to build a conservative base case and then maintain a second downside case to test resilience.

Letting and management fees: agent fees are frequently in the 8-15% range of collected rent, depending on region and service scope. A full management service is usually at the higher end, while rent-collection-only arrangements can be lower. If you self-manage, your direct fee may be lower, but you should still assign a time cost in your own planning, especially if you plan to scale beyond one property.

Insurance: many standard landlord insurance packages land around £200-£400/year for straightforward stock, but that can move higher with add-ons, claims history, higher rebuild values, or specialist tenant profiles. Budgeting only the cheapest quote is risky because excesses and exclusions can materially alter real protection. Treat insurance as core risk management, not an optional line item.

Maintenance: the long-used baseline of 1% of property value per year remains a practical planning anchor. Some years will be lower; others can spike because repairs cluster rather than smooth out. Boilers, roofing, damp remediation, appliance replacement, and safety compliance can create large one-off spend. A reserve policy is not optional if your strategy depends on stable monthly cash flow.

Voids and turnover: a voids allowance of 4 weeks/year is a practical default in many models. Even in high-demand micro-markets, occasional gaps can occur between tenancies, and re-letting typically adds cleaning, safety checks, and minor refresh costs. If your tenant profile is higher churn, stress with six to eight weeks of voids in downside scenarios.

Leasehold and building-level costs: service charge and ground rent can heavily influence net yield, especially in flats. Investors who focus only on purchase price and rent often misprice these recurring obligations. You should also plan for occasional major works in blocks where reserve funds may be insufficient.

Transaction and setup costs: stamp duty surcharge, legal fees, surveys, broker fees, furnishing, and initial refurbishment all reduce effective ROI in year one. Cash ROI should be measured against total cash invested, not deposit alone. This is one reason two similar properties can show very different returns for the same rent level.

Applying these assumptions honestly creates a more stable investment plan. It also helps you avoid over-bidding in competitive markets where headline yields can make deals appear stronger than they really are. Conservative underwriting is slower in the short term but usually better for long-term portfolio survival.

Section 24 explained: mortgage interest tax credit impact

Section 24 changed the economics of personally held buy-to-let property for many landlords by altering how finance costs are treated for tax. Under current treatment, individual landlords cannot rely on full mortgage interest deduction in the same way many did historically. Instead, mortgage interest relief is restricted to a 20% tax credit. That difference can be manageable for basic-rate taxpayers but materially painful for higher and additional-rate taxpayers with leveraged portfolios.

Practically, this means your taxable figure can look higher than your true cash profit. You may pay tax on income that has already been consumed by financing costs in cash terms. The result is that a property can show positive accounting profit in one view while generating limited or negative post-tax free cash in your bank account. This is why pre-tax cash flow alone is not enough for decision-making in 2026.

In this calculator, Section 24 is modeled in plain steps. First, we calculate taxable rental profit before finance costs for individual ownership. Then we estimate income tax at your selected band. After that, we apply the mortgage interest tax credit at 20%. The difference versus a fully deductible interest scenario is shown as “Section 24 extra tax impact,” making the drag visible rather than hidden.

If you are running moderate or high leverage, this line can determine whether a deal fits your criteria. Many investors now set a minimum post-tax monthly surplus target to avoid overreliance on future capital growth. Even if growth arrives, financing and tax pressure can still cause operational stress if cash flow is weak. Section 24 therefore needs to be treated as a central underwriting input, not a footnote.

Important: tax rules can change and individual circumstances vary. Use this as a planning model and confirm final treatment with a qualified tax professional before purchase.

Limited company route: when lower tax may improve viability

The limited company route is often discussed because it can improve post-tax efficiency for certain landlord profiles, especially where finance costs are high and personal tax rates are above basic band. In many structures, finance costs are treated more favorably for corporation tax calculations compared with personal ownership under Section 24. This can narrow the gap between accounting profit and actual cash outcome.

That said, company ownership is not automatically superior for every investor. You need to include setup and annual accounting costs, possible differences in lending rates and arrangement fees, and the long-term plan for extracting profits personally. If your target is immediate personal income, extraction taxes can reduce the headline benefit. If your target is compounding inside the company and gradual portfolio growth, the route can be attractive in many cases.

The practical solution is to compare both structures with the same property inputs and stress cases. This page allows route switching so you can see the difference in annual post-tax cash and ROI. A good decision is one that remains resilient under realistic rate, vacancy, and cost pressure in the ownership structure you can actually execute and maintain.

In short: limited company route can mean lower tax drag in many scenarios, but the right decision depends on strategy horizon, extraction plan, financing terms, and administrative tolerance. Treat structure as part of the full deal model, not as a separate afterthought.

Yield benchmarks, capital growth, and total return planning

Many UK investors ask one question first: “What is a good yield?” A common practical range for standard buy-to-let in many areas remains around 4-7%, but context is critical. A 5% yield in a highly liquid, low-void location can be preferable to a 7% headline yield in an area with weak tenant quality, unstable demand, or high maintenance burden. Yield should be interpreted alongside rental resilience and management intensity.

Capital growth also matters to long-hold strategy. Historical observations often place broad long-run property growth in a roughly 3-5%/year zone over extended periods, though this is uneven by cycle and location. You should avoid treating this as guaranteed output. Growth assumptions should be conservative and paired with cash-flow viability, because growth can be flat or negative for multi-year windows.

The most useful lens for portfolio planning is total return: yield + capital growth. If you rely only on yield, you may skip areas with stronger long-run scarcity characteristics. If you rely only on growth, you may tolerate weak cash flow and create refinancing stress. Balanced underwriting combines both and requires each deal to clear minimum thresholds. The calculator outputs both components so you can compare opportunities with a consistent framework.

A practical workflow is to set three gates before you view properties: minimum net yield, minimum post-tax cash surplus, and minimum stress-tested coverage at a higher mortgage rate. This filter protects time, prevents emotional overpaying, and creates better portfolio consistency over multiple acquisitions.

Stress testing before you exchange contracts

Robust investors underwrite downside first. In practice, you should test rate, rent, and occupancy shocks before committing. For rates, add at least 1.5-2.0 percentage points to your base mortgage assumption and observe whether annual cash flow remains acceptable. For rent, haircut the expected level by 5% and check whether your minimum monthly surplus still holds. For occupancy, increase voids from your base 4 weeks to 6 or 8 weeks and watch the effect on net yield and ROI.

You should also test cost inflation. Management fees can rise, insurance pricing can re-rate after claims cycles, and maintenance spend can cluster unexpectedly. If the deal only works at perfect assumptions, it is not robust enough for a long hold. In contrast, a property that remains workable in moderate downside cases usually gives you room to absorb shocks without forced decisions.

Another overlooked stress test is personal liquidity. Even profitable properties can require sudden cash injections for compliance, repairs, or extended voids. Keep an emergency reserve policy and include it in your portfolio plan. The aim is not to predict every event; it is to ensure the portfolio remains solvent and manageable when events occur.

This calculator is designed to support exactly that approach. Run a base case, then run at least two downside cases and one upside case. Keep screenshots or notes and decide based on the range, not a single point estimate.

2026 buy-to-let due diligence checklist

Use this short checklist before you proceed to offer stage and again before exchange:

• Confirm achieved local rents from comparable let listings and completed lets, not asking rents alone.
• Validate service charge, ground rent, and any anticipated major works for leasehold stock.
• Model agent fees in the 8-15% range unless your contract confirms a lower rate.
• Set insurance around £200-£400/year as baseline, then adjust with real quotes.
• Budget maintenance at around 1% property value and keep a separate reserve policy.
• Include a voids allowance of at least 4 weeks/year in the base case.
• Apply Section 24 effect for personal ownership and compare against limited company route.
• Model total return using both net yield and capital growth assumptions.
• Check mortgage terms for rate type, fees, reversion risk, and affordability buffers.
• Run downside tests before offer and keep decision criteria consistent.

This process may feel detailed, but it prevents expensive surprises. The strongest portfolios are usually built by disciplined underwriting rather than aggressive assumptions.

Frequently Asked Questions