Legal fees, surveys, broker fees
UK Property Investment Calculator 2025/26 | Buy-to-Let ROI Calculator
Free UK Property Investment Calculator. Calculate rental yield, ROI, cash flow and returns for buy-to-let properties. Includes mortgage costs, tax and expenses.
Last updated: February 2026
UK Property Investment Calculator 2025/26
Calculate rental yield, ROI, cash flow and returns for buy-to-let property investments
5-8%
Good Yield Target
+3%
BTL Stamp Duty
20%
Mortgage Interest Relief
Property Investment Calculator
Property Details
Finance & Mortgage
Running Costs
Buy-to-let typically requires 25% minimum
Typical: 8-12% of rent if using agent
Typically 10-15% of rent
% of year property is empty (4 weeks = 8%)
For leasehold properties
Investment Analysis
Rental Yield Rating
Poor (0-3%)
Fair (3-5%)
Good (5-8%)
Excellent (8%+)
Important 2025/26 Changes: Mortgage interest is no longer fully deductible. Instead, you receive a 20% tax credit on interest payments. This particularly affects higher and additional rate taxpayers who now pay more tax on rental income.
Understanding Rental Yields
Rental yield is a key metric for property investors, showing the return on your investment as a percentage.
Gross vs Net Yield
| Yield Type | Calculation | Example (£200k property, £850/month rent) |
|---|---|---|
| Gross Yield | (Annual Rent / Property Price) x 100 | (£10,200 / £200,000) x 100 = 5.1% |
| Net Yield | ((Annual Rent - Expenses) / Property Price) x 100 | ((£10,200 - £3,500) / £200,000) x 100 = 3.35% |
Always calculate NET yield! Gross yield looks attractive but ignores void periods, maintenance, management fees, insurance, and other costs that significantly reduce your actual returns.
UK Regional Yield Comparison
| Region | Average Gross Yield | Typical Property Price | Rating |
|---|---|---|---|
| North East | 7-9% | £130,000 | Excellent |
| North West | 6-8% | £180,000 | Good |
| Yorkshire | 6-7% | £190,000 | Good |
| Midlands | 5-7% | £220,000 | Good |
| South West | 4-5% | £320,000 | Fair |
| South East | 3-4% | £400,000 | Low |
| London | 3-4% | £550,000 | Low |
Buy-to-Let Tax Considerations
Mortgage Interest Tax Relief
Since April 2020, landlords can no longer deduct mortgage interest from rental income. Instead, you receive a 20% tax credit on interest payments.
Basic Rate Taxpayer (20%)
Little difference vs old system. You pay 20% tax on rental income, then receive 20% credit on interest = effectively the same.
Higher Rate Taxpayer (40%)
Significant impact. You pay 40% tax on rental income but only get 20% credit on interest. Effective tax rate much higher on leveraged properties.
Limited Company Option
Companies can still deduct mortgage interest fully. Pay Corporation Tax (25%) instead. Better for portfolio landlords or higher earners.
Allowable Expenses
- Letting agent fees - Full management or tenant-find fees
- Repairs and maintenance - Like-for-like replacements (not improvements)
- Insurance - Landlord, buildings, contents, rent guarantee
- Ground rent & service charges - For leasehold properties
- Accountancy fees - Tax return preparation
- Legal fees - For short leases (under 50 years)
- Utility bills - If you pay them (HMOs, between tenancies)
Stamp Duty for Buy-to-Let
Additional properties attract a 3% surcharge on top of standard stamp duty rates:
| Property Price | Standard Stamp Duty | BTL (with +3%) | Extra Cost |
|---|---|---|---|
| £150,000 | £0 | £4,500 | +£4,500 |
| £200,000 | £1,500 | £7,500 | +£6,000 |
| £300,000 | £2,500 | £11,500 | +£9,000 |
| £500,000 | £12,500 | £27,500 | +£15,000 |
Essential Due Diligence for UK Property Investors
Before committing to a buy-to-let purchase, thorough due diligence can make the difference between a profitable investment and a costly mistake. Here is a practical checklist used by experienced UK property investors:
Location Research
Look beyond headline rental yields. Investigate local tenant demand by checking rental listing times on platforms like Rightmove and Zoopla. Areas near universities, hospitals, and major employers tend to have consistent demand. Check the local council's development plans, as new housing supply can suppress rents. Verify local crime statistics via the police.uk website and check flood risk using the Environment Agency's flood map. Properties in regeneration areas can offer excellent capital growth potential but may carry higher short-term risks.
Financing Considerations for 2025/26
The buy-to-let mortgage market has evolved significantly. Most lenders now require rental income to cover 125-145% of the mortgage payment at a stress-tested interest rate (typically around 5.5%). With the Bank of England base rate influencing mortgage costs, it is essential to stress-test your investment at higher rates. Consider whether a fixed-rate mortgage (offering payment certainty for 2-5 years) or a tracker rate (potentially lower initially but variable) better suits your strategy. Remember that buy-to-let mortgage arrangement fees are typically £1,000-£2,000 and can be added to the loan, but this increases your interest costs over time.
The Section 24 Tax Impact
Since April 2020, Section 24 of the Finance Act has fully replaced mortgage interest relief with a 20% tax credit. This change has a disproportionate effect on higher-rate taxpayers. For example, a landlord earning £60,000 in employment income with £12,000 rental income and £8,000 mortgage interest previously paid 40% tax on £4,000 profit (£1,600). Under the new rules, they pay 40% tax on £12,000 (£4,800) minus a 20% tax credit on £8,000 interest (£1,600), resulting in a net tax bill of £3,200 - double the previous amount. This calculation is critical when assessing whether a property investment is viable and is one reason many landlords are transferring properties into limited companies.
Energy Performance Certificate (EPC) Requirements
All rental properties in England and Wales must have a valid EPC rating of E or above. The government has proposed raising the minimum to C for new tenancies, with existing tenancies to follow. Improving a property's EPC rating from E to C can cost between £5,000 and £15,000 depending on the works needed (insulation, boiler upgrades, double glazing). Factor these potential costs into your investment calculations, particularly for older properties. Properties that fail to meet minimum EPC requirements cannot be legally let, making this a non-negotiable expense.
Frequently Asked Questions
What is a good rental yield in the UK?
A good rental yield in the UK is typically 5-8%. Yields below 5% are considered low (common in London and the South East), while yields above 8% are excellent but may come with higher risk areas. The average UK rental yield is around 4-5%. Remember to calculate NET yield (after expenses) rather than just GROSS yield for accurate returns.
How much deposit do I need for buy-to-let?
Most buy-to-let mortgages require a minimum 25% deposit, though some lenders offer 20% or even 15% for certain products. Higher deposits (30-40%) typically get better interest rates. First-time landlords may need larger deposits. The rental income must typically cover 125-145% of the mortgage payment to qualify.
Should I buy personally or through a limited company?
Limited company ownership offers tax advantages: full mortgage interest relief, Corporation Tax at 25% vs personal rates up to 45%, and flexible profit extraction. However, there are downsides: higher mortgage rates, setup and admin costs, and CGT when transferring existing properties. Best for portfolio landlords, higher earners, or new purchases.
What is the 1% rule in property investment?
The 1% rule suggests monthly rent should equal at least 1% of the property purchase price (£200,000 property = £2,000/month rent). This indicates a 12% gross yield, which is rare in the UK. A more realistic UK target is 0.5-0.7% (6-8.4% gross yield). Use it as a quick screening tool rather than a strict requirement.
Is buy-to-let still worth it in 2024?
Buy-to-let can still be profitable with careful planning. Key factors: choose high-yield areas (North, Midlands), use interest-only mortgages for better cash flow, consider limited company ownership, factor in all costs including tax changes. While margins are tighter than before, rising rents and potential capital growth mean property remains a viable investment for those who do their research.
Expert Reviewed — This calculator is reviewed by our team of financial experts and updated regularly with the latest UK tax rates and regulations. Last verified: February 2026.
Last updated: February 2026 | Verified with latest UK rates
Pro Tips for Accurate Results
- Double-check your input values before calculating
- Use the correct unit format (metric or imperial)
- For complex calculations, break them into smaller steps
- Bookmark this page for quick future access
Understanding Your Results
Our Property Investment Calculator provides:
- Instant calculations - Results appear immediately
- Accurate formulas - Based on official UK standards
- Clear explanations - Understand how results are derived
- 2025/26 updated - Using current rates and regulations
Common Questions
Is this calculator free?
Yes, all our calculators are 100% free to use with no registration required.
Are the results accurate?
Our calculators use verified formulas and are regularly updated for accuracy.
Can I use this on mobile?
Yes, all calculators are fully responsive and work on any device.
People Also Ask
HMRC Compliant
Secure & Private
190+ Calculators
Always Free
Embed This Calculator on Your Website
Free to use. Copy the code below and paste it into your website HTML.