Rough costs for a buy-to-let

Purchase costs

• Deposit (Usually 25% for a buy-to-let)
• Purchase fees (solicitor fees, survey fees, broker fees, etc): ~£1,400
• Stamp duty: 3% (only applicable if you already have a property).
• Safety certificates and miscellaneous costs: £1,000

Monthly costs

• Mortgage interest: ~5% (at the time of writing) of the mortgage amount.
• Service charge and ground rent (for leasehold properties): The amount can vary greatly depending on the property so check with the estate agent.
• Letting agent’s property management fees: 10% of monthly rental income.
• Allowance for repairs: ~10% of monthly rental income.

Example (£100,000 flat renting at £725 / month)

Purchase costs

• Deposit: £25,000
• Purchase fees: ~£1,400
• Stamp duty: £6,000
• Safety certificates and miscellaneous costs: £1,000

Monthly costs

• Mortgage interest: £312.50 ( (£75,000 * 0.05) / 12 )
• Service charge and ground rent: £100
• Letting agent’s property management fees: £72.50
• Allowance for repairs: £72.50

Total monthly costs = £557.50

That leaves us with a monthly profit £167.50 (£725 – £620) and an annual profit of £2,010.