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Three buildings, one method, no hidden cell.
Each illustration is fictional. Streets are named only by city so nobody hunts for the door. Rates are assumptions a reader can replace. The arithmetic is the point.
Illustration A
Two-bed conversion flat, London N17
A leasehold flat near the desk. The gross yield looks ordinary for London. The month does not survive the service charge.
- Tenure
- Leasehold, 112 years assumed
- Borrowing
- Interest-only buy-to-let, 75% loan, illustrative rate 5.25%
| Band | Slice | Rate | Tax |
|---|---|---|---|
| Up to £125,000 | £125,000.00 | 5% | £6,250.00 |
| £125,001 to £250,000 | £125,000.00 | 7% | £8,750.00 |
| £250,001 to £925,000 | £135,000.00 | 10% | £13,500.00 |
| Total SDLT in this illustration | £28,500.00 | ||
| Line | Amount | Note |
|---|---|---|
| Purchase price | £385,000.00 | Asking price used in the illustration |
| Stamp Duty Land Tax | £28,500.00 | England or Northern Ireland, additional dwelling, UK resident |
| Deposit | £96,250.00 | 25% of the price |
| Loan | £288,750.00 | Interest-only. Capital is not repaid from rent in this model |
| Annual rent | £21,000.00 | £1,750.00 a month at the headline rent |
| Void allowance | £1,615.38 | Four weeks empty, charged on the whole rent |
| Letting management | £2,016.00 | Managed at 8% plus VAT, taken on the full headline rent |
| Insurance | £340.00 | Annual allowance |
| Compliance | £280.00 | Annual allowance |
| Service charge | £1,680.00 | Annual allowance |
| Ground rent | £250.00 | Annual allowance |
| Repairs reserve | £1,680.00 | Annual allowance |
| Cash before interest | £13,138.62 | Rent left after running costs and voids |
| Mortgage interest | £15,159.38 | Interest-only buy-to-let, 75% loan, illustrative rate 5.25% |
| Cash after interest | -£2,020.76 | Before income tax. Negative means the landlord pays in. |
| Cash put in on day one | £127,200.00 | Deposit, tax, legal, survey, and any works |
| Gross yield | 5.45% | Annual headline rent divided by price |
| Cash-on-cash, before tax | -1.59% | Cash after interest, divided by cash put in |
Read it this way. The flat throws off £13,138.62 before the bank and then -£2,020.76 after interest. The gross yield of 5.45% never mentions the service charge of £1,680.00 or the £28,500.00 of stamp duty. Cash put in on day one is £127,200.00. Cash-on-cash before tax is -1.59%.
Illustration B
Three-bed terrace, Leeds
A freehold brick terrace. The yield is kinder than London. After a short void and a managed let, the year barely clears the interest.
- Tenure
- Freehold house
- Borrowing
- Interest-only buy-to-let, 75% loan, illustrative rate 5.49%
| Band | Slice | Rate | Tax |
|---|---|---|---|
| Up to £125,000 | £125,000.00 | 5% | £6,250.00 |
| £125,001 to £250,000 | £103,000.00 | 7% | £7,210.00 |
| Total SDLT in this illustration | £13,460.00 | ||
| Line | Amount | Note |
|---|---|---|
| Purchase price | £228,000.00 | Asking price used in the illustration |
| Stamp Duty Land Tax | £13,460.00 | England or Northern Ireland, additional dwelling, UK resident |
| Deposit | £57,000.00 | 25% of the price |
| Loan | £171,000.00 | Interest-only. Capital is not repaid from rent in this model |
| Annual rent | £14,100.00 | £1,175.00 a month at the headline rent |
| Void allowance | £813.46 | Three weeks empty, charged on the whole rent |
| Letting management | £1,353.60 | Managed at 8% plus VAT |
| Insurance | £265.00 | Annual allowance |
| Compliance | £220.00 | Annual allowance |
| Repairs reserve | £1,410.00 | Annual allowance |
| Cash before interest | £10,037.94 | Rent left after running costs and voids |
| Mortgage interest | £9,387.90 | Interest-only buy-to-let, 75% loan, illustrative rate 5.49% |
| Cash after interest | £650.04 | Before income tax. Negative means the landlord pays in. |
| Cash put in on day one | £72,410.00 | Deposit, tax, legal, survey, and any works |
| Gross yield | 6.18% | Annual headline rent divided by price |
| Cash-on-cash, before tax | 0.90% | Cash after interest, divided by cash put in |
The terrace is the one that "works", and it works by £650.04 a year, which is £54.17 a month, before tax. That is why the stress page uses this house. A small kindness in the base case is not a cushion.
Illustration C
Five-room shared house, Nottingham
A licensed house in multiple occupation, self-managed. The room yield looks rich. Bills, a void room, and the works to get a licence pull the cash-on-cash back to earth.
- Tenure
- Freehold house, selective licensing assumed
- Borrowing
- Interest-only HMO product, 75% loan, illustrative rate 5.85%
| Band | Slice | Rate | Tax |
|---|---|---|---|
| Up to £125,000 | £125,000.00 | 5% | £6,250.00 |
| £125,001 to £250,000 | £125,000.00 | 7% | £8,750.00 |
| £250,001 to £925,000 | £90,000.00 | 10% | £9,000.00 |
| Total SDLT in this illustration | £24,000.00 | ||
| Line | Amount | Note |
|---|---|---|
| Purchase price | £340,000.00 | Asking price used in the illustration |
| Stamp Duty Land Tax | £24,000.00 | England or Northern Ireland, additional dwelling, UK resident |
| Deposit | £85,000.00 | 25% of the price |
| Loan | £255,000.00 | Interest-only. Capital is not repaid from rent in this model |
| Annual rent | £34,800.00 | £2,900.00 a month at the headline rent |
| Void allowance | £1,338.46 | One room empty for ten weeks, plus a 2% arrears allowance on the whole rent |
| Arrears allowance | £696.00 | A percentage of headline rent that never arrives |
| Insurance | £610.00 | Annual allowance |
| Repairs reserve | £2,400.00 | Annual allowance |
| Household bills | £6,400.00 | Annual allowance |
| Licence, annualised | £750.00 | Annual allowance |
| Common-parts cleaning | £780.00 | Annual allowance |
| Cash before interest | £21,825.54 | Rent left after running costs and voids |
| Mortgage interest | £14,917.50 | Interest-only HMO product, 75% loan, illustrative rate 5.85% |
| Cash after interest | £6,908.04 | Before income tax. Negative means the landlord pays in. |
| Cash put in on day one | £130,400.00 | Deposit, tax, legal, survey, and any works |
| Gross yield | 10.24% | Annual headline rent divided by price |
| Cash-on-cash, before tax | 5.30% | Cash after interest, divided by cash put in |
Five rooms at £580.00 each produce £34,800.00 a year and a gross yield of 10.24%. After bills, a void room, cleaning, the licence, repairs, and interest, £6,908.04 remains before tax. Cash put in includes £18,500.00 of works, so cash-on-cash is 5.30%, not the double-digit sticker. Self-management is assumed. If you would pay a manager, put that percentage back on the worksheet before you prefer this shape of deal.
These figures are illustrations built for the page. They are not a listing, not a forecast, and not a statement of what any actual property has returned. Tax, lending, and housing rules change. Take advice from a solicitor, a tax adviser, and a mortgage adviser before you commit money.
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