Does your buy-to-let stack in 2026? How to run the numbers

StackCheck · August 2026 · 8 minute read

Gross yield is how buy-to-lets get sold. Cashflow after every real cost is how they perform. The gap between those two numbers is where most first-time landlords get hurt — and in 2026, with the 5% stamp duty surcharge, lender stress tests and Section 24 all in play, the gap is wider than the marketing suggests.

This guide walks through the maths that actually decides whether a deal works, in the order a sensible investor (or their lender) checks it.

1. Start with the real cost of buying

The purchase price is only the headline. For a typical £200,000 BTL bought with a 75% mortgage in England, the day-one cash looks like this:

Stamp duty is the one people underestimate. Almost every BTL purchase is an "additional property", which in England and Northern Ireland adds 5% to every SDLT band. On a £200,000 purchase that's £11,500 — not the £1,500 a homeowner would pay. Every pound of it comes out of your return.

2. Run the lender's test before the lender does

Before cashflow even matters, the deal has to survive the ICR stress test. Lenders check that monthly rent covers 125–145% of the mortgage payment — calculated not at your pay rate, but at a stressed rate, typically your rate plus 2%.

Example: £150,000 loan, 7% stress rate → stressed payment of £875/month. At 145% ICR you need rent of at least £1,269/month. If the market rent is £1,100, most lenders will cut your loan — which means finding a bigger deposit or walking away. Better to know that before you've paid for a survey.

3. Cashflow — with honest running costs

The classic mistake is rent minus mortgage equals profit. The realistic monthly picture deducts:

• Management: 10–12% of rent with an agent (worth budgeting even if you self-manage — your time isn't free)
• Maintenance: 8–10% of rent averaged over the years, more for older stock
• Voids: 4% ≈ two empty weeks a year; more in slow markets
• Insurance and any service charge / ground rent

On £1,100 rent those allowances are roughly £270/month before the mortgage. A deal that "makes £400 a month" on the naive maths often makes £130 on the honest maths — and that's before tax.

4. Don't forget Section 24

If you own personally, mortgage interest is no longer deductible from rental profits — you get a 20% tax credit on the interest instead. For higher-rate taxpayers this bites hard: you pay 40% tax on (rent minus running costs) and only claw back 20% of the interest. Limited companies still deduct interest in full but pay corporation tax and have their own costs and frictions. This single rule is why so many 2026 landlords buy through a company — and why you should model both before choosing.

5. The thresholds that make a deal "stack"

Screening thresholds experienced investors commonly use — and the ones the StackCheck analyser applies:

• Monthly cashflow ≥ £150 after all running costs — enough buffer that one rate rise or void doesn't put you underwater
• Cash-on-cash return ≥ 6% — your annual cashflow divided by every pound of cash you put in (deposit, SDLT, refurb, fees)
• Passes the ICR stress test at 125%/145%

A deal that misses these isn't automatically a bad purchase — capital growth is a legitimate strategy — but you should be buying negative or thin cashflow knowingly, not discovering it after completion.

6. Worked example

£200,000 terrace, £1,100 rent, 75% LTV interest-only at 5.5%, higher-rate taxpayer:

Verdict: doesn't stack for a higher-rate personal buyer — the lender would likely cap the loan. The same house at £185,000, or with rent at £1,300, or bought through a limited company tested at 125%, moves the answer. That's exactly the kind of what-if a deal analyser is for: change one number, watch the verdict change.