How to assess a BTL deal

A good buy-to-let deal is more than a strong monthly rent figure. Use this calculator to test the full picture: purchase price, finance, stamp duty, legal and arrangement fees, refurbishment costs, ongoing expenses and tax.

Start by entering the property price and expected monthly rent. Then select either Loan (Mortgage, Bridging etc) or Cash, and add the relevant borrowing terms. The Deal Summary shows the cash required at purchase, monthly cash flow before and after tax, cash-on-cash return, and the potential total return over your chosen investment term.

Before proceeding with a deal, consider whether it still works if rents are lower than expected, maintenance costs rise, or interest rates increase. A resilient BTL investment should have room for these real-world changes.

How BRR refinance works

BRR stands for Buy, Refurbish, Refinance. The strategy usually involves buying a property below its potential value, improving it, then refinancing based on its new value.

Use the refurbishment option in this calculator to include improvement costs and, where relevant, a refinance loan. The model estimates the cash left in the deal after refinance by comparing the new borrowing against the original loan and refinancing costs.

The crucial question is not simply whether money can be released. It is whether the refurbished property will support the expected valuation, rent and refinance loan amount. Leave a contingency for works, and test the figures at a more conservative refinance valuation or LTV.

How much SDLT does a limited-company BTL pay?

A limited company buying a residential buy-to-let property will normally pay the higher rates of Stamp Duty Land Tax in England and Northern Ireland. The calculator includes an SDLT estimate as part of the upfront cash required.

From 1 April 2025, higher-rate SDLT starts at 5% on the first £125,000 of a qualifying additional residential purchase, with higher bands above that. Non-UK residents may also face an additional 2% surcharge. SDLT treatment can differ for companies, mixed-use property, multiple dwellings and properties in Wales or Scotland, so use the result as an initial estimate and confirm the position before exchange. Check the current HMRC SDLT rates.

What is a good BTL cash-on-cash return?

Cash-on-cash return measures the annual cash generated after tax against the cash you have left invested in the property. It is useful because it compares opportunities with different prices, deposits and refurbishment costs.

There is no universal “good” BTL return. A return that looks attractive may still come with high refurbishment risk, weak rental demand or little protection against higher interest rates. Compare the calculator’s post-tax cash-on-cash return across several scenarios, including a higher interest rate and lower rent, rather than relying on one headline figure.

For BRR deals, pay particular attention to the cash left in after refinance: releasing capital may improve the percentage return, but it does not remove the need for sufficient monthly cash flow and a realistic reserve fund.

BTL interest-rate stress test explained

Interest rates are one of the most important variables in a leveraged buy-to-let investment. The calculator’s stress-test figures help show what happens to monthly cash flow when borrowing costs increase.

Test the deal using a rate above the one currently offered by a lender. If the property only produces a surplus at one very specific interest rate, it may be vulnerable at remortgage or when a fixed period ends. Also allow for management, maintenance, insurance, service charges, void periods and future compliance costs.

A useful BTL deal should be understandable at a glance: you should know how much cash is required, what it produces each month after tax, and how it performs if conditions become less favourable.

Important information

This calculator provides planning estimates, not tax, legal, mortgage or investment advice. Tax depends on your circumstances and ownership structure. Individual landlords generally receive mortgage-interest relief as a basic-rate tax reduction rather than deducting finance costs from rental income, while company ownership has different tax and extraction considerations. HMRC’s guidance on finance-cost relief explains the individual-landlord rules.