Rental Property ROI Calculator UK 2026
Calculate the complete return on investment for a UK buy-to-let property. Combines rental yield, capital growth, tax costs and mortgage leverage for total ROI.
Rental Property ROI Calculator
Frequently Asked Questions
What is a good ROI on a buy-to-let in the UK?
A good ROI on a UK buy-to-let depends on your measure. Gross rental yields above 5–6% are considered strong; net yields (after mortgage, expenses and tax) of 3–4% are typical in most regions. When you factor in capital growth of 3–4% per year and leverage (using a 25% deposit), the total leveraged ROI on invested capital can reach 15–25% per annum in rising markets. However, in the current high-mortgage-rate environment, many landlords find their cash-on-cash yield is lower, relying more on capital appreciation.
How do you calculate the total return on a rental property?
Total return = (net rental profit after tax × years) + capital gain on sale. Net rental profit accounts for mortgage interest (under Section 24, basic-rate tax credit only applies), agent fees, maintenance, insurance and voids. Capital gain = growth rate × property value × hold period, minus CGT at 18% or 24%. Divide total monetary return by your initial deposit (plus any additional capital invested) to get ROI as a percentage. The calculator above does all of this automatically.
Does Section 24 make buy-to-let unviable?
Section 24 (the mortgage interest restriction introduced from 2017) prevents higher-rate and additional-rate taxpayers from deducting mortgage interest directly from rental income. Instead they receive a 20% basic-rate tax credit. For 40% taxpayers this effectively doubles their tax on mortgage interest costs. It has made highly leveraged properties with thin yields loss-making on a cash flow basis, particularly where mortgage rates rose sharply in 2023–24. However, properties bought with larger deposits, or held in a limited company (which is unaffected by Section 24), can still be profitable.
Is buy-to-let still profitable in the UK in 2026?
Yes, but selectively. Profitability depends heavily on the purchase price, mortgage rate, local rental demand and your tax position. Properties in high-yield areas (e.g. Northern England, Midlands) with mortgage rates below 4.5% can still produce positive cash flow. Lower-yielding areas (London, South East) often require acceptance that short-term cash flow is negative while banking on long-term capital growth. Many landlords are switching to limited company ownership to mitigate Section 24 and benefit from lower corporation tax rates.
How much deposit do I need for a buy-to-let mortgage?
Most buy-to-let mortgage lenders require a minimum 20–25% deposit, with the best rates typically available at 25–40% LTV. Lenders also apply a rental stress test: the monthly rent must usually cover 125–145% of the monthly mortgage payment (at a stressed rate of typically 5–6%). As an example, on a £250,000 property with a 25% deposit (£62,500), you would need a mortgage of £187,500. At 4.5% over 25 years, that is approximately £1,040 per month; rental income would need to be around £1,300–£1,500 per month to pass most lenders' stress tests.