Investment Buyer Guide

The headline metrics

• Gross yield = annual rent ÷ purchase price. Useful as a quick filter.
• Net yield = (annual rent − all costs) ÷ purchase price. The number that actually matters.
• Cash-on-cash return = annual cash flow ÷ cash invested. Critical when leveraging.
• Capital growth — historic and projected. Highly area-specific.

All the costs you must include

• Mortgage interest (and the lender's stress test).
• Letting agent fees — typically 8–12% (managed) of rent.
• Maintenance — budget at least 10% of rent per year.
• Insurance, ground rent, service charge, gas safety, EICR, EPC.
• Voids — assume 1 month per year unless you have hard data.
• Tax: income tax on rent, Section 24 mortgage interest restriction (personal ownership), CGT on disposal.

Personal name vs limited company

Section 24 restricts mortgage interest relief for individual landlords, pushing many higher-rate taxpayers towards limited company (SPV) ownership. Companies pay corporation tax on profits and can offset interest in full — but face different mortgage rates, stamp duty surcharges, and tax on extracting profits. Always take advice for your specific circumstances.

Buy-to-let, HMO and serviced accommodation

• Single-let buy-to-let — simplest, lowest yield, lowest hassle.
• HMO (House in Multiple Occupation) — higher yield but additional licensing, fire safety, Article 4 considerations.
• Serviced accommodation / short let — highest yield potential, most operationally intensive, and increasingly regulated.
• Commercial — typically longer leases, FRI (Full Repairing & Insuring), tenant covenant strength is everything.

Stamp duty for investors

Additional 3% (rising to 5% from October 2024 in England) SDLT surcharge on second homes and buy-to-lets, on top of standard rates. Multiple Dwellings Relief was abolished in 2024. Use Frontdoor's stamp duty calculator to model the exact figure.