Calculate Mortgage Repayments
Securing a mortgage is a huge financial commitment. Whether you are saving for your first investment or financial planning for your next, it is crucial that you calculate correctly. Use our mortgage calculator to help to determine what your monthly repayments will be. This way you can ensure that the rent earnt covers the repayments on your buy to let property.
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Monthly Mortgage Repayment -
Calculate Stamp Duty
Use this calculator to determine the Stamp Duty Land Tax (SDLT) on your property investment. Stamp Duty is a tax paid by the buyer of a UK residential property. The stamp duty rate ranges from 2% to 12% of the purchase price. However, it can change based upon the value of the property, the purchase date, and whether you are a first-time buyer or not. Also, a 2% surcharge is added to each of these rates for buyers who are non-UK residents.
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Stamp Duty To Pay: -
Effective Rate: -
What is Stamp Duty?
Stamp duty is a tax that is levied on property purchases in the UK. It is generally the most expensive cost when buying investment property in the UK and is payable after the completion of your purchase. Stamp Duty plays an integral part in the viability of purchasing an investment property and represents a key financial consideration. Much the same as other taxes, certain tax brackets apply when calculating Stamp Duty. These depend on your buying status and the cost of the property you are considering purchasing. Some general points that are worth considering are:
- Stamp Duty only becomes relevant on properties over £250,000.
- If you are a first time buyer you will not pay stamp duty on anything below £425,000.
- If you already own a home you will pay a 5% surcharge.
- If you are a 'non-UK resident' you will pay a 2% surcharge.
UK Stamp Duty Rates 2024
The following table shows the amount of Stamp Duty you will pay on a property purchase before any applicable surcharges.
Please note that first-time buyers do not pay any stamp duty on the first £425,000 of the value of their property purchase and 5% between £425,001 and £625,000. If the price is over £625,000, the rules for people who’ve bought a home before, apply.
| Property / Lease Premium / Transfer Value | SDLT Rate |
|---|---|
| Up to £250,000 | 0% |
| £250,001 to £925,000 | 5% |
| £925,001 to £1,500,000 | 10% |
| Above £1,500,000 | 12% |
| Reason for Stamp Duty Surcharge | Surcharge Rate |
|---|---|
| Buying additional properties | 5% |
| Non-UK residence | 2% |
Examples of Stamp Duty Calculation
Stamp duty can vary based on your circumstances. Below are three examples different types of property purchases (with amount) and the table on the right shows how stamp duty is calculated in each situation.
1. First-time buyer – Purchasing a property for the first time.
2. Buyer who has bought before – Selling one property and then purchasing a different property.
3. Investor buying another property – purchasing a buy-to-let property whilst already owning a property.
4. Overseas Buyer of UK Property – An overseas/non-UK resident purchasing a property in the UK.
| 1. First Time Buyer (£450,000 Purchase Price) | |
|---|---|
| 0% on the first £420,000 | £0 |
| 5% on the remaining £25,000 | £1,250 |
| TOTAL SDLT | £1,250 |
| 2. Buyer Who Has Bought Before (£325,000 Purchase Price) | |
|---|---|
| 0% on the first £250,000 | £0 |
| 5% on the final £75,000 | £3,750 |
| TOTAL SDLT | £3,750 |
| 3. Investor Buying Another Property (£325,000 Purchase Price) | |
|---|---|
| 0% on the first £250,000 | £0 |
| 5% on the final £75,000 | £3,750 |
| + | |
| 5% of £325,000 second home surcharge | £16,250 |
| TOTAL SDLT | £20,000 |
| 4. Overseas Buyer of UK property (£325,000 Purchase Price) | |
|---|---|
| 0% on the first £250,000 | £0 |
| 5% on the final £75,000 | £3,750 |
| + | |
| 5% of £325,000 second home surcharge | £16,250 |
| + | |
| 2% of £325,000 non-residency surcharge | £6,500 |
| TOTAL SDLT | £26,500 |
Is it possible to reduce Stamp Duty?
Unless you are a first time buyer or your property is below the threshold, there is no way to avoid paying stamp duty tax. However, there are ways to reduce stamp duty. Firstly, if you know the price band in which your property falls, you could negotiate the price with the seller in order to access a lower price band. That way, the stamp duty you pay will be reduced. Secondly, buying land with planning consent to build means paying less stamp duty than buying an existing property. Therefore, if you were to build your own house on your own land, you would be reducing the amount of stamp duty you pay. Thirdly, there are situations when you can claim a refund on the tax you paid. This applies if you sell your main home within three years of buying a second one. In this case you can claim back the 5% second home surcharge.
Rental Yield Calculator
Discover whether a property is worth investing in. Use our Rental Yield Calculator to work out the rental yields on your investment.
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Gross Yield: -
What is a Rental Yield?
There are two main ways an investment property will make you money. Firstly, the property should deliver a passive income through the rent received from the tenant. Secondly, the property should increase in value over the years it is owned. It can then be sold at a profit or refinanced to withdraw the equity.
Of the two sources of income, the rent can be determined with a higher degree of certainty and should therefore be strongly considered before buying a property. In investment terms, this is called a rental yield and relates to the return an investor will receive on their property purchase. A rental yield is one of the most important metrics in determining whether a property is a good investment. It can also be crucial in securing a buy-to-let mortgage and should therefore never be overlooked.
The calculation to work out a rental yield is straightforward. Firstly, you must work out the total rental income the property will receive annually. This figure is then divided by the property price. You then multiply this figure by 100 and you will have the rental yield.
As an example:
Annual Rental Income = £12,000 \ Property value = £200,000 x 100 = 6%
If you are unsure about this it is always advisable to speak to a professional who can guide you on the rental market in a particular location.
How do you Determine a Property's Rental Value
When purchasing an investment property, especially one that is being sold off-plan, it is important that you understand what rents are achievable so you can calculate the rental yield. Although your agent will usually provide you with their own rental projections you should ensure these are realistic.
To determine achievable rental values there are a few criteria you should pay attention to. Firstly, you should assess the general quality of the development/property. Look at the size of the property, the views, the specification of interior, any outdoor space and development amenities. You should then compare the standard of the property with comparable properties in the same area to determine achievable rental values.
What is a Good Rental Yield?
A good rental yield usually constitutes anything above 5%. This is because your rental income should cover the cost of running the property. Anything below 5%, you will be at risk of losing money.
Net Yield v Gross Yield?
A gross yield is the return on investment calculated before expenses. The purchase price will be divided by the income the property generates. The NET yield is the percentage after the expenses. The NET yield takes into account the extra fees and expenses that come with owning a property such as maintenance, insurance, and tax. Essentially, the NET yield is the real return the investor will receive.
Which Cities Have the Best Yields?
Rental yields can be impacted by several factors, hence why they vary so much across the UK. The UK average is 3.63%, so anything above that can be considered an above average yield. A city with good rental yields will be affordable but still offer high rental growth. Therefore, investors should look for ‘emerging locations’. These are up-and-coming cities that are relatively affordable, but rental demand will grow over time.
For example, in London, rental demand is high, but property prices are equally as high. Therefore, your rental returns will be poor. Therefore, investors should look for cities where prices are affordable but rental demand is expected to boom. Liverpool is a great example. The majority of Liverpool postcodes are reaching 6% yields. This is because property in Liverpool is famously affordable, but the city is becoming much more attractive to residents thank to its regeneration projects, amenities, and economic growth. Thus, rental prices are increasing as well, providing some lucrative rental yields.
CityRise Investor Resources
We believe in making the process of investment as smooth and seamless as possible. For that reason, we have compiled some useful investor tools to aid the process for our buyers. Check out some of our city guides here.
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