Buy-to-let
Buy a home and rent it to a single household on an assured (periodic) tenancy.
In plain English
You buy a property, usually with a buy-to-let mortgage, and rent it out. The rent pays the mortgage and running costs; anything left over is your income. Over time you may also benefit if the property rises in value — but it can also fall.
Switch to professional for underwriting detail.
Capital requirements
Usually a 25% deposit plus about 5–8% of the price for SDLT (including the 5% surcharge on additional dwellings), legal, survey, lender fees and initial works.
Cost assumptions to budget for
- SDLT at higher rates
- Legal and survey fees
- Mortgage arrangement fees
- Letting/management (often 8–15% of rent)
- Insurance, maintenance, compliance certificates
- Voids between tenants
Potential returns
Net yields after costs are commonly much lower than headline gross yields. Use the calculator with your own rent evidence.
Main risks
- Interest-rate rises reducing cashflow
- Rent arrears and void periods
- Regulatory change (tenancy reform, energy standards)
- Falling property values
- Concentration in one property or area
Legal checks
- Check the title for restrictions and covenants (e.g. against letting)
- Leasehold flats: check the lease permits subletting and review service charges
- Use a written tenancy agreement compliant with current law
Regulatory checks
- Protect deposits in a government-approved scheme within 30 days and serve the prescribed information.
- Right to Rent immigration checks (England).
- Annual gas safety check; electrical installation condition report at least every 5 years; smoke and carbon monoxide alarms.
- EPC of at least E to let (minimum energy efficiency standard). Higher future minimums have been proposed — check the current position.
- Tenancy law in England is being reformed by the Renters' Rights Act 2025 (including ending section 21 'no-fault' evictions). Check which provisions are in force on your start date.
- Selective or additional licensing may apply in some council areas.
- Individuals cannot deduct mortgage interest from rental income; they get a 20% basic-rate tax credit instead. Companies can deduct interest but pay corporation tax and face tax on extracting profits. Take advice from a qualified tax adviser before choosing how to own.
Is it suitable?
Often suits
- Long-term investors with a cash buffer
- People comfortable being a landlord or paying an agent
Usually not suitable for
- Anyone who would struggle with months of no rent
- Short-term speculation
A general guide, not a personal recommendation. Suitability depends on your finances, experience and attitude to risk.
Step-by-step
- Set your budget and buffer (at least 6 months of costs).
- Research rents and demand in the area — get letting agent rent appraisals.
- Run a Plotlumen report and the buy-to-let calculator with stressed rates.
- Get a mortgage agreement in principle from a broker.
- Offer, instruct a solicitor and surveyor; check licensing and lease terms.
- Complete compliance (gas, EICR, EPC, alarms, deposit) before the tenancy starts.
- Review annually: rent, costs, remortgage dates, regulations.
Financial calculations
Your offer or asking price.
Use local letting agents' valuations — not included in this report unless shown.
e.g. licensing, safety certificates
Default costs are assumptions for illustration — replace them with your own quotes. Stamp duty (£15,000) and refurbishment (£0) come from the other tabs.
After income tax (owned personally)
An estimate for one owner in England, Wales or Northern Ireland, assuming all the profit falls in the band you choose and ignoring carried-forward amounts. Companies pay corporation tax instead and can deduct interest. Check with an accountant.
Three scenarios
| Scenario | Cashflow / month | Net yield | Cash-on-cash |
|---|---|---|---|
| Conservative | £-1,124 | -0.13% | -16.73% |
| Expected | £-884 | -0.11% | -13.17% |
| Optimistic | £-804 | -0.10% | -11.97% |
Conservative: rent −10%, rate +1.5 points, 4 extra void weeks, running costs +20%, works +20%. Optimistic: rent +5%, rate −0.5 points, 1 fewer void week, running costs −10%, works −5%. These are projections from your inputs, not guaranteed returns.
Sensitivity: annual cashflow
| Rent | Rate -1% | Rate +0% | Rate +1% | Rate +2% |
|---|---|---|---|---|
| -10% | £-8,737 | £-10,612 | £-12,487 | £-14,362 |
| +0% | £-8,737 | £-10,612 | £-12,487 | £-14,362 |
| +10% | £-8,737 | £-10,612 | £-12,487 | £-14,362 |
Official sources
- Renting out your property (GOV.UK)
- Renters' Rights Act 2025 — guidance (GOV.UK search)
- Stamp Duty Land Tax (GOV.UK)
- Tax relief for residential landlords (GOV.UK)
- Minimum energy efficiency standard — landlord guidance (GOV.UK)
- Tenancy deposit protection (GOV.UK)
- Right to rent checks (GOV.UK)
Last reviewed 31 Oct 2026. Rules change — check the source before relying on this guide.
Not advice