Buy-to-Let Cashflow Calculator United Kingdom

Whether you are buying a rental or reviewing one you own, the first question is whether the rent covers the bills. Enter the rent, the mortgage balance and rate, your running costs and how many weeks a year you expect the property to stand empty, and the calculator returns the monthly and annual cashflow before tax. It leaves tax out on purpose, so you can see whether a property pays its own way first.

How the calculation works

Every figure is one you supply. The calculator multiplies your monthly rent by twelve, then reduces it for void weeks: two empty weeks out of fifty-two take off just under 4% of the gross rent. The result is the effective annual rent, the money you can realistically expect to collect.

From that it subtracts the mortgage interest, worked out as the balance times the interest rate on the assumption that the loan is interest-only, and your other running costs, taken monthly and multiplied by twelve. What is left is the annual cashflow, and dividing by twelve gives the monthly figure most landlords watch.

Why void periods and costs matter

Plugging in the headline rent and a mortgage payment is not enough; voids and running costs often decide whether a rental works. A property empty for a month between tenants loses about 8% of its annual rent, which can turn positive cashflow negative on a highly geared purchase.

A full management service typically costs around a tenth of the rent, landlord insurance and a sensible maintenance allowance add more, and leasehold flats carry service charges and ground rent on top. A realistic monthly cost figure, rather than an optimistic one, does more than anything else to make the result reliable.

Interest rates and stress-testing

Because the mortgage balance and rate are separate inputs, stress-testing is easy. Run the numbers at your current rate, then again a couple of points higher to see what happens when a fixed deal ends. Interest-only cashflow is very sensitive to rates: on a £150,000 loan, each percentage point adds £1,500 a year, or £125 a month. A property comfortably positive at 4% can go into the red at 6%, and it is better to find that out here than on a mortgage statement.

A worked example

A flat lets at £1,200 a month with a £150,000 interest-only mortgage at 5.5%, £200 a month of running costs and two void weeks a year. Twelve months of rent is £14,400, and two void weeks trim it to an effective £13,846.15. The mortgage interest is £150,000 × 5.5%, or £8,250 a year, and running costs come to £2,400. That leaves annual cashflow of £3,196.15, about £266.35 a month before tax. At 7.5% the interest rises to £11,250 and the surplus shrinks to £196.15 a year, about £16 a month, so a slightly higher rate or one more void week would push it negative.

Assumptions and limitations

This is a pre-tax planning estimate. It assumes an interest-only mortgage, so a repayment mortgage will show worse cashflow because capital repayments are not modelled. It does not include Income Tax on the rental profit, the 20% mortgage interest tax credit, stamp duty or other purchase costs, or capital growth. A rental’s return is cashflow plus any long-term gain, and this tool measures only the first. Void weeks and costs are your own estimates, so the output is only as realistic as your inputs. Use the rental income tax calculator for the tax side, and speak to a qualified adviser before committing to a purchase.

About This Buy to Let Cashflow Calculator

Use this buy to let cashflow calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.