Buying a property to rent out involves more than finding a tenant and covering the mortgage. The true buy-to-let costs include the deposit, stamp duty, mortgage fees, legal work, insurance, repairs, tax and periods when the property is empty.
That is why the key question is not simply whether the rent covers the mortgage. You also need to know whether the property still works once the full cost of buying and running it is included.
Before you commit, build a budget that covers both the purchase and the ongoing landlord costs.
Before budgeting for buy-to-let
Budget for more than the deposit
Stamp duty, legal fees, mortgage costs and initial repairs can all increase the amount you need upfront.
Make sure the rent stacks up
Expected rent needs to support the mortgage while leaving room for costs and periods without tenants.
Allow for ongoing landlord costs
Insurance, maintenance, management fees, service charges and safety checks can all reduce your rental return.
Tax can affect your returns
Tax treatment can change your rental profit and may differ depending on how you own the property.
See what the numbers could look like
Explore borrowing, rental income and potential yield with our buy-to-let calculator.
What are the upfront buy-to-let costs?
Your upfront buy-to-let costs can vary widely, but the deposit is usually the largest single amount. You should then allow for the taxes, fees and property costs needed before the home is ready to let.
Cost
What to budget for
Deposit
Usually one of the highest upfront costs
Buy-to-let stamp duty
Depends on price, location and your circumstances
Legal fees
Conveyancing, searches and related legal work
Mortgage fees
Product, arrangement and valuation fees may apply
Survey
A separate survey can help identify property problems
Initial property costs
Repairs, furniture, appliances and preparation
The exact cost of buy-to-let depends on the property, mortgage and work needed. Therefore, it is sensible to keep some cash back rather than using every available pound for the deposit.
How much deposit might you need?
A buy-to-let mortgage deposit is often larger than the deposit needed for a standard residential mortgage. The exact amount depends on the lender, property and expected rent.
A larger deposit reduces the amount you need to borrow and can improve your loan-to-value. In turn, that may widen your mortgage choice. However, putting more money into the property also leaves less cash available for stamp duty, repairs and unexpected costs.
When setting your budget, consider the deposit alongside the rest of the purchase rather than as a separate target.
How much buy-to-let stamp duty could you pay?
Buy-to-let stamp duty can be one of the highest costs beyond the deposit.
In England and Northern Ireland, higher Stamp Duty Land Tax rates usually apply if buying the property means you will own more than one residential property. From 1 April 2025, the additional-property rates start at 5% on the first £125,000, with higher rates applying to the portions above this amount.
Scotland and Wales use different property tax systems, so the amount depends on where you buy.
If you are working out the stamp duty on a buy-to-let purchase, use our calculator to get an estimate based on the property price and your circumstances.
Factor stamp duty into your budget
Estimate the stamp duty that may apply to your buy-to-let purchase.
What does a buy-to-let mortgage cost?
The rate is only part of the cost; repayment type and charges can all affect what you ultimately pay.
Interest rate
Understand the monthly cost
Your interest rate and loan size affect how much you pay each month and the overall cost of borrowing.
Product fees
Look beyond the headline rate
Arrangement or product fees can be fixed or based on a percentage of the loan. A lower-rate deal is not always cheaper once fees are included.
Repayment type
Plan how you will repay the loan
Many buy-to-let mortgages are interest-only, so monthly payments usually cover the interest without reducing the balance. You will need a plan to repay the capital later.
Early repayment charges
Check the cost of switching early
Charges may apply if you repay, remortgage or switch your deal before an agreed period ends.
What could a buy-to-let property really cost?
A worked example can make the numbers easier to see. Suppose you buy a £220,000 rental property with a £55,000 deposit and a £165,000 interest-only mortgage.
Example detail
Illustrative amount
Property price
£220,000
Deposit
£55,000
Mortgage amount
£165,000
Example mortgage rate
5.5%
Approx. monthly interest
£756
Stamp duty*
£12,900
Legal and survey costs
Allow separately
Repairs and preparation
Allow a separate buffer
*This assumes the purchase is an additional residential property in England or Northern Ireland and uses current SDLT rates.
The £756 mortgage payment is only the starting point. You may still need to pay insurance, management fees, maintenance, service charges and tax. In addition, rent can stop during an empty period while most property costs continue.
This is why you should assess the complete cash requirement before you buy rather than focusing on the headline mortgage payment.
Illustration only. Actual mortgage payments, fees, tax and other costs depend on the property, lender, mortgage deal and your circumstances.
What are the ongoing costs of being a landlord?
The costs of being a landlord continue after a tenant moves in. Some are predictable, while others arrive unexpectedly.
Insurance
Landlord insurance can protect against risks linked to renting out a property.
Repairs and maintenance
Budget for routine maintenance as well as larger, unexpected repairs.
Letting and management
Letting agent and management fees can reduce the rental income you keep.
Safety and compliance
Safety checks and legal requirements can create both regular and one-off costs.
Empty periods
Rent may stop between tenants, while mortgage payments and other bills continue.
Factor these costs into your numbers before judging whether the rental income makes the property worthwhile.
How costs affect your rental return
Rental yield can help you compare rent with the property price, but gross yield does not show every cost.
For example, a property may produce a healthy gross rental yield while leaving a much smaller amount after the mortgage, insurance, maintenance, management fees and tax.
A useful next step is to compare the expected monthly rent with the mortgage and realistic running costs. You can then see how much room remains for repairs, empty periods and other surprises.
What tax costs should landlords consider?
Tax can affect what you pay when you buy, the profit you keep while renting and what you receive when you sell.
Tax when you buy
Factor in purchase taxes
Buying an additional property can mean paying a higher rate of property tax, depending on where in the UK the property is located.
If the property is in England or Northern Ireland, this is Stamp Duty Land Tax. Different property taxes apply in Scotland and Wales.
Tax on rental profit
Understand what you can deduct
If you own the property personally, Income Tax is generally based on your rental profit after allowable expenses.
Costs such as letting agent fees, insurance, maintenance and repairs may be deductible. For individual residential landlords, mortgage interest is generally dealt with through a basic-rate tax reduction rather than being deducted in full from rental income.
Tax when you sell
Allow for Capital Gains Tax
Capital Gains Tax may apply if you sell a rental property for more than its allowable cost.
Tax rules and allowances can change. Consider speaking to a qualified tax adviser or accountant about your individual circumstances.
When should you review buy-to-let options?
Existing mortgage
Your current mortgage needs a plan
This could apply if your mortgage deal is ending, an interest-only balance needs repaying, or your lender will not extend the term.
Using your equity
You want to use value from your home
You may want to fund improvements, adapt your property, support family, create retirement flexibility or repay borrowing.
Comparing options
You want to compare later-life routes
It may be worth comparing remortgaging, downsizing, retirement interest-only mortgages and lifetime mortgages before you decide.
How Muttuo Mortgages can help
Buy-to-let costs depend on more than the headline rate. We can help you understand how rent, deposit size, lender criteria and buy-to-let fees may affect your options.
Review your expected rent, deposit and loan-to-value
Compare buy-to-let options from more than 100 lenders
Explore personal and limited-company mortgage routes
Talk through your options
Explore buy-to-let mortgage options and understand how lenders may assess the property, rent and your wider circumstances.
Your property may be repossessed if you do not keep up with your mortgage repayments.
The Financial Conduct Authority does not regulate some buy-to-let mortgages.
Your buy-to-let costs questions answered
What costs are involved in buy-to-let?
The main costs include the deposit, stamp duty or property tax, legal work, mortgage fees and any repairs needed before letting. Once the property is rented, you should also allow for the mortgage, insurance, maintenance, management, safety checks, tax and empty periods.
How much deposit do you need for a buy-to-let mortgage?
The amount depends on the lender, property, rent and your circumstances. A larger deposit reduces the mortgage and may improve lender choice, but you still need enough cash for the other buying costs.
Are buy-to-let mortgage fees higher?
Buy-to-let mortgage fees can be significant. Some lenders charge fixed product fees, while others charge a percentage of the mortgage. Compare the fee and rate together rather than choosing a deal on rate alone.
How much does buy-to-let insurance cost?
The buy-to-let insurance cost varies with the property, tenancy and level of cover. Compare policies based on the protection you need rather than price alone.
What ongoing costs do landlords need to budget for?
Ongoing costs can include mortgage payments, insurance, repairs, management fees, service charges, safety checks, accounting costs and empty periods. Keeping a separate cash buffer can help you manage costs that do not arrive every month.
