Buy-to-Let Costs: The Full Breakdown Nobody Tells You
2026-08-29
Property investment marketing loves to talk about yields, growth, and passive income. It's less enthusiastic about the 30+ costs that sit between gross rent and your actual profit. Understanding every cost — not just the obvious ones — is what separates investors who build wealth from those who wonder where all the money went.
This is the complete list. Every cost of buying, holding, and selling a UK investment property in 2026.
Part 1: Buying Costs
These hit your bank account between finding a deal and getting the keys.
| Cost | Amount | Notes |
|---|---|---|
| Deposit (25% standard) | 25% of price | £37,500 on a £150,000 property |
| Stamp duty (SDLT, additional) | 5-8% of price | £7,500-£12,000 on £150k-£200k |
| Solicitor/conveyancer | £1,000-£2,000 | Includes searches, land registry |
| Survey (Level 2 minimum) | £350-£600 | Level 3 for older/renovation properties |
| Mortgage broker fee | £300-£500 | Some brokers are free (paid by lender) |
| Mortgage arrangement fee | £0-£2,000 | Can usually be added to loan |
| Mortgage valuation | £0-£500 | Often free with product |
| Searches (if not in legal fee) | £250-£400 | Local authority, environmental, drainage |
| Bank transfer fees | £25-£50 | Telegraphic transfer for completion |
Total buying costs (excluding deposit): £9,500-£18,000 on a typical £150,000-£200,000 purchase.
:::stats £48,000-£65,000 | Total Cash Needed (£150k-£200k Property) £9,500-£18,000 | Acquisition Costs (Excl. Deposit) 5-8% | SDLT (Additional Property) :::
For exact SDLT calculations, see the SDLT Calculator.
:::tool sdlt-calculator Calculate Your Stamp Duty :::
Part 2: Setup Costs (Before First Tenant)
Between getting keys and receiving first rent.
| Cost | Amount | Notes |
|---|---|---|
| Gas safety certificate | £60-£100 | Legal requirement before letting |
| EICR (electrical cert) | £150-£300 | Legal requirement (5 yearly) |
| EPC | £60-£120 | Must be minimum E (C by 2030) |
| Smoke/CO alarms | £50-£100 | Legal requirement (every floor) |
| Decoration / refresh | £500-£5,000 | Depends on condition |
| Cleaning (professional) | £150-£400 | End of any works, before photos |
| Letting agent tenant-find fee | £400-£800 | Or DIY via OpenRent (£49-£99) |
| Inventory (professional) | £100-£200 | Protects your deposit claims |
| Landlord insurance | £150-£350/year | Buildings + liability minimum |
| Locks changed | £80-£150 | Good practice on new purchase |
| Furniture (if furnished) | £1,000-£3,000 | Per room if letting furnished |
Total setup costs: £1,500-£5,000 (unfurnished, reasonable condition) to £5,000-£15,000 (needs work or furnished let).
Part 3: Annual Running Costs
The ongoing costs of holding the property while tenanted.
| Cost | Monthly | Annual | Notes |
|---|---|---|---|
| Mortgage (interest-only, 5%) | £469-£625 | £5,625-£7,500 | On £112,500-£150,000 |
| Letting agent (full management) | 8-12% of rent | £720-£1,440 | On £750-£1,000/month rent |
| Maintenance allowance | 10% of rent | £900-£1,200 | Budget this even in good years |
| Insurance (buildings + landlord) | £15-£30 | £180-£360 | Specialist landlord policy |
| Void periods (1 month/year avg) | — | £750-£1,000 | Lost rent during empty periods |
| Gas safety certificate | — | £60-£100 | Annual |
| Boiler service | — | £80-£120 | Annual (good practice, often combined with gas cert) |
| Accountancy | — | £150-£350 | Annual tax return prep per property |
| Rent guarantee insurance (optional) | — | £150-£300 | Covers missed rent |
| Legal protection insurance (optional) | — | £100-£200 | Covers eviction costs |
Total annual running costs (excluding mortgage): £3,000-£5,000
Total annual running costs (including mortgage): £8,600-£12,500
Costs That Aren't Annual But Hit Eventually
| Cost | Frequency | Amount |
|---|---|---|
| EICR | Every 5 years | £150-£300 |
| EPC renewal | Every 10 years | £60-£120 |
| New boiler | Every 12-15 years | £2,500-£3,500 |
| Redecoration (full) | Every 5-7 years | £1,500-£3,000 |
| New carpet/flooring | Every 5-10 years | £1,000-£2,500 |
| New kitchen | Every 15-20 years | £4,000-£8,000 |
| New bathroom | Every 15-20 years | £2,500-£5,000 |
| Roof repairs | As needed | £500-£5,000 |
| Window replacement | Every 20-30 years | £3,000-£6,000 |
Sinking fund: Budget £1,000-£2,000/year per property for these cyclical costs. In years when nothing major happens, the fund grows. In years when something breaks, it covers the bill without destroying your cashflow.
Part 4: Tax Costs
The tax that takes a bite out of your rental profit.
| Tax | Rate | Impact |
|---|---|---|
| Income tax on rental profit (basic) | 20% | After allowable deductions |
| Income tax on rental profit (higher) | 40% | Rental profit stacks on top of salary |
| Section 24 restriction | Removes interest deduction | 20% credit only (see Rental Tax Guide) |
| Corporation tax (if company) | 19-25% | Full interest deduction allowed |
| National Insurance | 0% | Rental income doesn't attract NI |
For higher-rate taxpayers in personal name, effective tax on rental income can exceed 40% after Section 24. In a company, effective rate is 19-25% with full interest deduction.
:::tool rental-tax Calculate Your Tax Position :::
Part 5: Selling Costs
When you eventually dispose of the property.
| Cost | Amount | Notes |
|---|---|---|
| Estate agent fee | 1-1.5% + VAT | £2,400-£5,400 on £200k+ |
| Solicitor (sale) | £800-£1,500 | Conveyancing |
| EPC (if expired) | £60-£120 | Must be valid for sale |
| Capital Gains Tax | 18-24% of gain | After allowable deductions |
| Mortgage early repayment charge | 0-5% | If within fixed period |
CGT on a typical gain: Bought for £150,000 (total base cost: £160,000 including costs). Sold for £220,000 after 8 years. Gain: £55,000. Less £3,000 allowance = £52,000 taxable. At 24% = £12,480 CGT.
For exact CGT calculations, see Capital Gains Tax on Property or use the calculator.
:::tool property-gains-tax Calculate Your CGT :::
The True Cost Over 10 Years
Let's total everything for a £175,000 property held for 10 years:
| Category | Total Over 10 Years |
|---|---|
| Acquisition costs (excl. deposit) | £12,500 |
| Setup costs | £2,000 |
| Mortgage interest (10 years at 5%) | £65,600 |
| Management + maintenance | £25,000 |
| Insurance (10 years) | £3,000 |
| Voids (10 years) | £9,000 |
| Compliance (certs, renewals) | £2,500 |
| Cyclical repairs (sinking fund) | £15,000 |
| Tax (company, 10 years) | £3,000-£8,000 |
| Total 10-year costs | £137,600-£142,600 |
Against 10 years of rent (£10,800/year growing at 3%): £123,800
The property costs more to run than it generates in rent over 10 years. Wait — so why invest?
Because you also have:
- Capital growth: +£60,000-£80,000 (3-4%/year)
- Equity: the £43,750 deposit is still yours inside the property
- A growing income stream (by year 10, rent covers all costs with surplus)
- An asset that continues appreciating and generating income indefinitely
The first 5-7 years of a leveraged BTL are the hard years. After that, rent growth compounds while costs stay relatively flat, and the deal gets better every year.
Using This Data
The Deal Analyser includes all of these costs in its calculation, showing you net cashflow after everything — not the fantasy headline yield.
:::tool deal-analyser See the Real Numbers on Any Deal :::
Summary
- Total cash needed to buy: deposit + 10-12% of price in additional costs
- Annual running costs: £3,000-£5,000 (excluding mortgage)
- Budget £1,000-£2,000/year sinking fund for cyclical repairs
- Tax takes 20-40%+ of rental profit depending on structure
- Selling costs: agent + legal + CGT = significant
- The first 5-7 years are tight; years 7+ are where the returns compound
- Include EVERY cost in your analysis — the deals that work after honest costing are the ones that build wealth
Costs in this guide are estimates based on 2026 UK market data. Always calculate costs specific to your property, area, and circumstances.