Model the complete financials of any UK buy-to-let property. Include mortgage costs, management fees, void periods, maintenance, insurance and Section 24 tax to see your true monthly cash flow and net yield.
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Buy-to-let profitability is not just about yield. At 2026 mortgage rates (4.0–4.8% for BTL), a 5–6% gross yield property may produce zero or negative cash flow after all costs and tax. Many landlords are discovering that properties that worked perfectly at 2% rates now run at a loss. This tool models the complete picture — not just the top-line yield.
Before 2020, landlords could deduct mortgage interest from rental income before calculating tax — effectively receiving full tax relief on interest costs. Since April 2020, individual landlords can only claim a 20% basic rate tax credit on mortgage interest. For a higher-rate (40%) taxpayer with a £700/month mortgage interest cost: old system saved £280/month in tax. New system saves only £140/month. This £140/month difference (£1,680/year) fundamentally changed the economics of leveraged buy-to-let for higher-rate taxpayers.
Section 24 does not apply to buy-to-let properties held in a limited company. Companies can deduct all mortgage interest as a business expense. At higher-rate income, this can make the ltd company route significantly more tax-efficient. However, extraction of profits from the company via dividends attracts dividend tax, and mortgage rates for companies are typically 0.5–1% higher. Professional tax advice is essential before choosing this route.
BTL mortgage lenders require rental income to cover at least 125% of monthly mortgage payments (145% for higher-rate taxpayers) at a stressed rate of 5.5%. On a £135,000 BTL mortgage (75% LTV on £180,000): monthly interest at 5.5% = £619. Minimum required rent: £619 × 145% = £898/month for a higher-rate taxpayer. This test determines maximum lending, not the advertised rate.
It depends entirely on the specific numbers. Properties with gross yields above 6.5%, purchased with 25%+ deposits at sub-4.5% BTL rates, can still generate positive cash flow even with Section 24. Properties in London with 3.5–4% gross yields at 80% LTV almost certainly run at a cash flow loss at current rates. Use this calculator with your exact numbers — the difference between a profitable and loss-making BTL often comes down to a 0.5% yield difference.
Most BTL lenders offer up to 75–80% LTV (requiring 20–25% deposit). Some specialist lenders offer 85% LTV for lower-risk profiles. Minimum deposits for BTL are typically £25,000 regardless of percentage. The rental stress test — which requires rent to cover 125–145% of mortgage payments at a stressed rate — often limits effective LTV below the headline maximum even if the property qualifies on other criteria.
Yes — this is a requirement of your mortgage terms and conditions. A residential mortgage does not permit letting the property without lender permission (consent to let). Renting without permission can result in the lender demanding full repayment of the mortgage. Most lenders will grant consent to let with a small fee increase, or you can switch to a formal BTL mortgage. Always inform your lender before becoming a landlord.