How Much Buy-to-Let Profit Does £1,000 Rent Leave?
September 14, 2026
If a buy-to-let rents for £1,000 a month, how much does the landlord actually keep? In the example I use here, it’s £337.50 a month before tax with management, or £437.50 if I manage it myself. In the video I round those figures to roughly £340 and £440. The £1,000 arriving in the bank is the starting point, and quite a few people need paying before I can call the remainder mine.
I’ve been investing in UK property for around 15 years and own more than £3.5 million worth of property. When I’m looking at another deal, I want to know what it leaves after sensible allowances. A big rent figure on an advert tells me very little without the purchase price, borrowing and running costs alongside it.
This is a worked example using my assumptions, rather than a promise that every £1,000 rental will produce the same return. It also explains why the price I pay matters so much.
You can also watch my original £1,000 rent breakdown on YouTube.
Start with the property and mortgage
Let’s take a house costing £140,000. With a 25% deposit, I put in £35,000 and borrow £105,000 on an interest-only buy-to-let mortgage. For this calculation I use a 5% interest rate. That’s an assumption for the example, not a mortgage offer available to every investor.
The annual interest is £105,000 multiplied by 5%, which gives £5,250. Divide that by 12 and the monthly mortgage cost is £437.50. Before I’ve paid an agent or repaired anything, the £1,000 rent has therefore become £562.50.
An interest-only mortgage leaves the underlying £105,000 debt outstanding. I’m paying for the borrowing each month, rather than gradually clearing that balance. That distinction matters when looking at both monthly cash flow and the longer-term plan. I’ve explained the trade-off in my guide to interest-only versus repayment buy-to-let mortgages.
With a repayment mortgage, the monthly payment would also include capital repayment and would be higher on otherwise comparable terms. That reduces spendable cash, although repaying debt builds equity. You need to decide which outcome you’re measuring before comparing two properties.
Management, maintenance, voids and insurance
Next, I allow £100 a month for management, equivalent to 10% of the rent. I’ve managed properties myself plenty of times, but I don’t want an investment plan that assumes I’ll always do every job personally. Including management helps me judge whether the property can support the arrangement I might want later.
For an actual purchase, I’d check whether an agent’s quote includes VAT, tenant-finding charges and other extras. The £100 here is the total management allowance in this illustration. If your quote is higher, use the higher figure. The investment doesn’t become more profitable because a spreadsheet leaves something out.
I then put aside another £100 a month for maintenance and voids combined. That’s 10% across both, not 10% for each. It’s an allowance for costs that arrive unevenly: decorating between tenants, repairs, appliances and those larger bills that eventually turn up.
You might have a tenant stay for five years and have very little go wrong. That’s lovely when it happens, but it doesn’t mean the next five years will be identical. A boiler doesn’t care that you’ve already spent the spare rent. Nor does the mortgage stop because the property is empty while you arrange the next tenancy.
Finally, I allow £300 a year for landlord insurance, or £25 a month. That’s my example estimate for a normal three-bedroom semi. Your actual premium depends on the property and cover, so get a quote rather than treating my estimate as a universal price.
What £1,000 rent leaves after those costs
The monthly calculation is straightforward: £1,000 rent, less £437.50 mortgage interest, £100 management, £100 maintenance and void allowance, and £25 insurance. That leaves £337.50 before tax, equivalent to £4,050 a year.
If I self-manage and remove the £100 management allowance, the figure becomes £437.50 a month or £5,250 a year. I’ve saved a cash expense, but I’ve also taken responsibility for the work. That may suit me at one stage of building a portfolio and suit me less at another.
These are planning figures after the stated allowances. They aren’t a guarantee of identical monthly bank balances. A repair can cost more than that month’s reserve, and a long empty period can eat through several months of expected surplus. The reserve needs to exist in cash when I need it.
I’d also add any property-specific costs before making an offer. Licensing, safety checks, accounting, mortgage fees, service charges or ground rent can change the result where they apply. My simple house example is a useful starting point; a flat with substantial service charges needs its own calculation.
Why before-tax cash flow isn’t taxable profit
I’m deliberately saying before tax. I wouldn’t simply take £337.50, deduct my personal tax percentage and assume that’s the final answer. The cash-flow calculation and the tax calculation can differ, particularly where an individual owns a mortgaged residential rental.
HMRC’s guidance on working out rental income explains allowable expenses and the restriction of residential finance-cost relief to the basic rate for affected individual landlords. Companies are outside that particular restriction. Money reserved for a future repair also isn’t automatically an expense already incurred for tax purposes.
That’s why I want the ownership and tax position worked through separately before buying. My article on buy-to-let in a limited company or personal name covers how I think about that decision. The structure should fit the investor’s circumstances, rather than being chosen because one headline calculation looks appealing.
The return on all the money I put in
The deposit is £35,000, but that’s unlikely to be all my money in the deal. Purchase taxes, solicitors, mortgage costs and any initial work can take the total much higher. In the video, I use roughly £45,000 to £50,000 as an illustrative total cash commitment.
Using £50,000 and the exact £4,050 annual surplus gives an 8.1% cash-on-cash return before tax. The calculation is annual cash flow divided by total cash invested, multiplied by 100. My rounded video figures of £4,000 and £50,000 produce 8%.
That’s different from gross rental yield. Here, £12,000 annual rent divided by the £140,000 purchase price gives about 8.6% gross yield. The two percentages look similar by coincidence, but they answer different questions. Gross yield ignores borrowing and running costs; cash-on-cash return considers what the cash I’ve committed is producing under the stated assumptions.
An 8% return isn’t bad in my view. It just isn’t enough on its own to make me immediately buy the house. I still want to know whether I can buy well, whether tenants want to live there and whether the numbers have room for something going wrong.
Why I’d rather buy the £140,000 house for £126,000
If I genuinely think a property is worth £140,000, I’d prefer to pay £126,000, or perhaps £130,000 at a push. At £126,000, the gap to my £140,000 valuation is £14,000. That’s more than three years of the roughly £4,000 annual rental surplus in this example.
It explains why I’m willing to make offers and walk away. The purchase decision can do a lot of work before the first rent payment arrives. I’d sometimes accept a lower yield where the discount makes the overall deal more attractive.
However, that £14,000 is potential equity against a valuation. It isn’t £14,000 of spendable profit deposited into my bank, and selling costs or purchase costs reduce the overall economic gain. If my valuation is optimistic, the apparent discount may disappear altogether.
An asking price isn’t proof of market value. I want convincing comparisons with similar properties that have sold, allowing for condition, location and other differences. Where recent comparisons are thin, I need to be more cautious. My guide to buying property below market value explains why this is central to my approach.
Stress-test the deal before relying on the surplus
Using the same £105,000 interest-only balance, a 6% rate means £525 monthly interest. Keeping every other assumption unchanged, the managed surplus falls to £250. At 7%, interest is £612.50 and the surplus becomes £162.50. Those are sensitivity calculations, not forecasts for your next mortgage.
They show why I don’t want a purchase that only works under one perfect set of conditions. A modest change in borrowing cost can take a meaningful slice of the money I expected to keep. Add a larger repair and the margin matters even more.
I also ask whether the rent is realistic now. A projected rent that depends on improvements I haven’t priced, or an increase I haven’t achieved, shouldn’t be treated as current income. I want a deal that stands up at today’s achievable rent before giving it credit for a better future.
The kind of property I’m happy to hold
I like fairly boring property: decent two- and three-bedroom houses, sensible prices and areas where ordinary people want to live. I’m interested in tenant demand, condition and a workable margin. A premium finish can be attractive, but paying a premium for it can make the investment less attractive.
Over time, rising rent can improve the picture. I’ve had Sheffield properties renting for around £700 a month six or seven years ago that now achieve over £1,000. The mortgage balance doesn’t automatically increase because rent has risen, although the interest rate and other costs certainly can.
I remain positive about property over a long holding period. I’ve also lived through values moving up, down and sideways, mortgage costs doubling, and the uncertainty at the start of Covid. Future growth isn’t guaranteed, so I need enough resilience to hold through the difficult periods.
For this example, roughly £340 a month managed or £440 self-managed is a useful result if I’ve bought the right house at the right price. If you want to discuss your own numbers, book a free 20-minute strategy call. You can also explore the Starter Club or Done For You service as you work out your next step.