About this calculator
A buy-to-let is three calculations wearing one coat. The yield tells you what the property earns: gross yield is annual rent divided by price; net yield subtracts the mortgage interest and running costs, and is the figure to compare against other investments. The cashflow tells you what lands in your bank account each month — on an interest-only mortgage it can look healthy while the debt never shrinks, which is a bet on house prices, not an income strategy. And the stamp duty tells you what the entry ticket costs: an additional property pays the higher rates in all three UK nations, which on a £250,000 English purchase is £15,000, of which £12,500 is pure surcharge.
The fourth calculation is the lender's, and it can veto the other three. Under the Prudential Regulation Authority's buy-to-let underwriting standards (SS13/16), lenders must test that the rent covers the mortgage interest at a stressed rate — at least 5.5% in most assessments — by a margin: an interest coverage ratio of at least 125% is the floor, and many lenders require 145% for higher-rate taxpayers. Note the test uses the stressed rate, not your pay rate, and interest-only maths even if you choose repayment. If the rent fails the test, the lender cuts the loan, whatever the yield looked like.
How to use it
- Enter the price, your deposit (25% is the usual BTL minimum) and the realistic monthly rent — check achieved rents, not asking rents.
- Choose interest-only or repayment and set the rate and term; add your annual running costs honestly (agent, insurance, maintenance, void cover).
- Pick the nation — the stamp duty table below the results switches between SDLT higher rates, LBTT plus ADS, and LTT higher rates.
- Read the coverage result: it is the lender's test, run at the stress rate. If it fails, the rent needed tells you the gap — or increase the deposit until it passes.
The formula
Net yield uses the first year's actual interest (for a repayment mortgage, interest falls each year, so the net yield slowly improves; the cashflow line uses the full repayment payment, which is what actually leaves your account). The coverage formula is the lender's interest coverage ratio: stressed interest is calculated on the full loan as if interest-only, whatever repayment type you selected.
Worked example
A £250,000 flat in England with a £75,000 deposit and £1,250 a month rent: the mortgage is £175,000, costing £729.17 a month interest-only at 5.00%. Gross yield is 6.00%; after £8,750 of first-year interest and £1,500 of running costs, the net yield is 1.90% and the monthly cashflow £395.83. Stamp duty is £15,000 — the standard bill would be £2,500, so the additional-property surcharge adds £12,500. The coverage test: stressed interest at 5.50% is £802.08 a month, so £1,250 of rent gives 156% coverage — comfortably over the 125% line; the rent could fall to £1,002.60 before this loan size failed.
Sources: HMRC SDLT higher rates (standard bands + 5 points since 31 October 2024), Revenue Scotland LBTT plus the 8% Additional Dwelling Supplement (since 5 December 2024), Welsh Government LTT higher rates (since 11 December 2024); rental-coverage conventions per the PRA supervisory statement SS13/16 on buy-to-let underwriting. Last updated: October 2026.
Frequently asked questions
How much stamp duty does a buy-to-let pay?
Far more than a homebuyer. England & NI: the standard SDLT bands plus 5 points each (5/7/10/15/17%) — £15,000 on a £250,000 purchase. Scotland: standard LBTT plus the Additional Dwelling Supplement, a flat 8% of the whole price — £22,100 total on the same £250,000. Wales: a separate higher-rates LTT table — £14,950 on £250,000. The surcharge generally applies to purchases of £40,000 or more where you will own another property at the end of the day; replacing your main home can be exempt, and a surcharge paid because you bought before selling can usually be reclaimed if you sell within 36 months.
What rental coverage do BTL lenders require?
Under the PRA's underwriting standards the rent must cover the stressed mortgage interest by at least 125% (the interest coverage ratio), with the stress rate at 5.5% or higher in most assessments. Many lenders set 145% for higher-rate taxpayers and some limited-company cases — a legacy of mortgage interest no longer being fully deductible against rental income for individual landlords (Section 24). The result: the rent, not your income, caps the loan size.
Interest-only or repayment for a buy-to-let?
Most BTL mortgages are interest-only: lower payments, better cashflow, and the debt is cleared by selling or refinancing at the end. The risk is total reliance on the property being worth more than the loan later. Repayment guarantees the debt falls but can turn monthly cashflow negative at today's rates — the net yield in this calculator shows the two honestly: interest cost is the same in year one, the difference is what happens to the balance.
What is a good rental yield in the UK?
Gross yields average around 5–7% in much of the North and Midlands and 3–4.5% in London and the South East. Compare net yield, not gross, against your mortgage rate: if the net yield is below the interest rate, the property loses money on a financed basis and only works as a house-price bet. Also remember yield ignores voids, arrears, tax on rental income and the eventual capital gains tax.
What formula does this uk buy-to-let calculator use?
Gross yield = (monthly rent × 12) ÷ price × 100. Net yield = (annual rent − first-year mortgage interest − annual costs) ÷ price × 100. Interest-only payment = loan × rate ÷ 12. Coverage = rent ÷ (loan × stress rate ÷ 12) × 100. Stamp duty: England — standard SDLT bands + 5 points; Scotland — standard LBTT + 8% of the whole price (ADS); Wales — the separate LTT higher-rates band table. Net yield uses the first year's actual interest (for a repayment mortgage, interest falls each year, so the net yield slowly improves; the cashflow line uses the full repayment payment, which is what actually leaves your account). The coverage formula is the lender's interest coverage ratio: stressed interest is calculated on the full loan as if interest-only, whatever repayment type you selected. The worked example on this page applies the formula step by step with real numbers, so you can verify the result by hand.