Buy-to-Let Calculator UK

A gross yield of 6%+ is generally considered good for UK buy-to-let. Northern cities like Sunderland, Hull and Liverpool regularly achieve 7–10% gross. London averages 2–4%. After costs (mortgage, management, maintenance, voids), a net yield of 3–5% is typical in high-yield areas.

Section 24 (introduced 2017, fully phased in from 2020) prevents private landlords from deducting mortgage interest from rental income before calculating tax. Instead you receive a 20% basic rate tax credit on the interest paid. A higher-rate (40%) taxpayer can end up paying tax on income that doesn't exist as cashflow — significantly reducing or eliminating returns. Using a limited company avoids Section 24 entirely.

Most UK buy-to-let mortgages require a minimum 20–25% deposit. With a 25% deposit you access a wider range of rates. Lenders typically require rental income to cover 125–145% of the monthly interest payment (ICR). First-time buyers and those purchasing through limited companies may face additional criteria.

Limited companies avoid Section 24 and pay 19% corporation tax on profits, which can result in significantly higher post-tax cashflow for higher-rate taxpayers. However, Ltd Co buy-to-let mortgages typically carry higher rates (+0.5–1%) and there are setup and ongoing accountancy costs (£500–£1,500/year). If you plan to hold long-term and are a 40% taxpayer, a limited company is usually more tax-efficient. Use the Section 24 tab above to compare.