The running costs that quietly kill buy-to-let returns

StackCheck · August 2026 · 7 minute read

Gross yield is the number in the listing. Net yield is the number in your bank account. The distance between them is running costs — and it is where optimistic spreadsheets turn into disappointing returns.

Here is what a realistic 2026 cost budget actually looks like, and why the honest figure is closer to a quarter of your rent than the "just the mortgage" version most first-timers assume.

The costs, with real percentages

• Letting agent management: 10–12% of rent (plus VAT, plus tenant-find fees). Budget it even if you self-manage — your time has a value, and one day you may hand it over.
• Maintenance and repairs: 8–10% of rent averaged over the years. Older properties and anything with a boiler, roof or damp history sit at the top of that range.
• Voids: an allowance of around 4% covers roughly two empty weeks a year. In slower markets or with student lets, budget more.
• Insurance: landlord buildings and liability cover — typically £150–400 a year.
• Service charge and ground rent: flats only, but can be £1,000–3,000+ a year and is often the figure that sinks a leasehold deal.
• Compliance: annual gas safety certificate, an electrical (EICR) inspection every five years, EPC, and smoke/CO alarms — a few hundred pounds a year averaged out.

The 2026 cost on the horizon: EPC C

Worked example: gross vs net yield

£200,000 property, £1,100/month rent (£13,200/year):

Gross yield is £13,200 ÷ £200,000 = 6.6%. Net yield, before the mortgage even appears, is £9,432 ÷ £200,000 = 4.7%. Nearly 30% of the rent has gone, and you still have the mortgage and tax to pay.

The rule to remember

Budget 25–30% of rent for running costs before the mortgage. A deal that only works if costs are zero is not a deal — it is a hope. The StackCheck analyser applies these allowances by default (and lets you adjust every one), so the cashflow and verdict you see are the honest version, not the listing version. It is the same discipline behind whether a buy-to-let stacks.

Common questions

What percentage of rent should I budget for buy-to-let running costs?

A realistic figure is 25-30% of rent before the mortgage, covering management (10-12%), maintenance (8-10%), voids (around 4%), insurance and compliance. Leasehold flats also carry service charge and ground rent on top.

What is a realistic void allowance for a rental?

Around 4% of annual rent, which is roughly two empty weeks a year, suits a typical single-let in a steady market. Student lets, HMOs and slower markets warrant a higher allowance.

Do landlords need to budget for EPC upgrades in 2026?

If you buy a property rated D or E, yes. The minimum rating to let is currently E, but proposed rules require EPC C by 2030 with a spending cap of about £10,000 per property. Treat the likely upgrade as a future capital cost when you assess the deal.