For a £200,000 buy-to-let property, you need between £60,000 and £70,000 in cash. Not £50,000. The deposit is only part of the story.
That total includes the 25% deposit (£50,000), stamp duty with the additional property surcharge (approximately £8,500), solicitor fees (£1,500–£2,500), survey (£400–£800), mortgage arrangement fee (£500–£2,000), and any immediate works to make the property lettable.
This number is the single most important thing to know before you start looking at properties. Everything else flows from it. Here's what makes up each cost — and where the surprises tend to be.
The deposit
Most buy-to-let lenders require 25% of the purchase price. On a £200,000 property, that's £50,000.
Some lenders accept 20%, but with higher interest rates and tighter criteria. Going in at 30% or more unlocks better products. I'd recommend budgeting for 25% as your baseline and treating anything lower as a bonus, not a plan.
For current rates and lender criteria, see our buy-to-let mortgage guide.
Stamp duty
Since April 2025, anyone buying an additional residential property in England pays a 5% surcharge on top of the standard SDLT rates.
On a £200,000 buy-to-let, the total SDLT bill comes to approximately £8,500. Use our stamp duty calculator for exact figures.
This cost didn't exist before 2016, when the surcharge was first introduced at 3%. It was raised to 5% in the Autumn Budget 2024. It's a meaningful addition to your acquisition costs that you can't negotiate or avoid.
Tax on rental income
This is where the post-2016 landscape really changed. Individual landlords can no longer deduct mortgage interest from rental income before calculating tax. Instead, you receive a tax credit at the basic rate (20%) on your finance costs. This is Section 24, and it affects higher rate taxpayers significantly.
From April 2027, rental income tax rates increase by two percentage points across the board — basic rate landlords will pay 22% on rental profits, higher rate landlords 42%.
Some landlords buy through a limited company to mitigate these changes. The trade-offs are real and worth understanding before you commit to a structure. See our guide to incorporating a property portfolio.
Compliance costs
Before you can let a property, you need to be compliant. The list is specific:
A valid Energy Performance Certificate (EPC) rated E or above (C from 2028 for new tenancies). A gas safety certificate renewed annually. An electrical installation condition report (EICR) every five years. Working smoke alarms on every floor and a carbon monoxide alarm in any room with a fixed combustion appliance. Tenant deposits registered with a government-approved scheme within 30 days.
From 1 May 2026, landlords must also comply with the Renters' Rights Act 2025, which abolished Section 21 evictions and introduced rolling periodic tenancies.
Each of these has a cost attached. Gas certificates run £60–£90 annually, EICRs £150–£300, and EPC assessments £60–£120. Budget for them as recurring line items, not one-off surprises.
Running the numbers honestly
Before buying, I calculate three things:
Gross yield: annual rent divided by purchase price. Net yield: annual rent minus all costs (mortgage interest, insurance, maintenance, management fees, voids, compliance costs) divided by total cash invested. Cash-on-cash return: annual profit after all costs divided by the cash you put in.
A property with a 6% gross yield can drop to 2–3% net yield once all costs are accounted for. I've modelled deals that looked strong at headline yield but broke even or lost money once voids and maintenance were factored in realistically.
Our rental yield calculator handles the arithmetic. Use honest numbers — assume at least one month's void per year and budget 10% of rent for maintenance.
The area question
High purchase prices in southern England often mean yields below 4%. Northern cities typically offer 6–8% gross yields but with different tenant demand patterns and capital growth profiles.
There's no universally correct answer here. It depends on whether you're optimising for cashflow (higher yield, typically northern markets) or capital growth (lower yield, typically southern or commuter-belt markets). See our regional market data for current numbers.