First Buy-to-Let Budget: A £150,000 Worked Example
October 19, 2026
By Mark Parham
BTL Reality · Practical property education
First buy-to-let · Understand the full cash budget
The deposit is only one part of the money needed for your first buy-to-let. You also need to account for purchase tax, professional and mortgage fees, any works and cash to deal with problems after completion.
In the worked example below, a £150,000 property has a £37,500 deposit but a total starting cash budget of £64,600. That is an illustration using stated assumptions, not a minimum required for every investor or a quote for an actual property.
If you are still choosing between a home to live in and a separate rental, read how much money you need to start property investing. This guide goes deeper into the purchase costs of one hypothetical buy-to-let.
Start with the full budget. Then decide what is affordable, what needs checking and whether the likely rental cashflow justifies taking the next step.
Scope of the example: a straightforward residential purchase in England by a UK-resident individual who already owns a home, with the additional-property SDLT rates applying. The same SDLT rates apply in Northern Ireland, but Scotland and Wales have different purchase taxes. Special circumstances can change the calculation.
How much deposit does a buy-to-let need?
A 25% deposit is a useful starting assumption for many buy-to-let examples. Actual requirements depend on the lender, property and borrower. MoneyHelper’s buy-to-let mortgage guide explains that 25% is generally needed, while some higher loan-to-value products may be available.
On a £150,000 purchase, a 25% deposit is £37,500 and the remaining £112,500 would be borrowed. This is 75% loan to value. The deposit alone does not establish that you qualify: the expected rent, lender’s tests, property and your circumstances also matter.
Get appropriate mortgage advice before treating a loan amount as available. A lower lender valuation or a more restrictive rental calculation can mean you need more cash than expected.
A complete starting budget for a £150,000 property
Here is one way to organise the figures. Every allowance apart from the calculated deposit and SDLT is an illustrative planning amount. Replace it with quotes and an assessment of the actual property.
| Item | Amount | What the example assumes |
|---|---|---|
| Deposit | £37,500 | 25% of £150,000. |
| SDLT | £8,000 | Additional-property rates in England; calculation below. |
| Legal work and searches | £2,000 | Placeholder total, to be replaced with a quote. |
| Survey / inspection | £600 | Assumed appropriate inspection cost. |
| Mortgage and broker fees | £2,000 | Assumed cash-paid fees; not added to the loan. |
| Initial works | £8,000 | Assumed refurbishment and preparation. |
| Works contingency | £2,000 | Extra cash kept for cost overruns. |
| Operating reserve | £4,500 | Cash retained for the letting period. |
| Total starting cash | £64,600 | Includes £6,500 retained as contingency and operating reserve. |
The deposit is 58% of this example’s cash budget
What could change the total?
Leasehold service charges, a major repair, licensing, initial insurance, furniture, letting setup, travel or a lender’s fee can change the budget. Some may fit within your allowances and others require separate lines. Do not treat this table as a complete quote for an unseen property.
Get a written scope for works and clarify whether quotes include VAT where applicable. If mortgage fees are added to the loan, reflect the higher borrowing and any effect on lender limits and interest instead of simply removing the cost.
Your own household emergency money should be considered separately. Cash reserved for a rental should not quietly become the same money you rely on for essential personal spending.
Does a first buy-to-let attract extra stamp duty?
“First buy-to-let” does not necessarily mean “first property”. In our England example the buyer already owns a home, so the additional-property rates apply. At the rates checked on 30 September 2026, the calculation is £125,000 × 5% plus £25,000 × 7%, giving £8,000. See HMRC’s residential SDLT rates.
If the purchase is your only residential property, the standard-rate calculation may differ. Ownership by a spouse or another purchaser, non-UK residence and company purchases can affect the position. Check your facts with the conveyancer and use HMRC’s higher-rates guidance.
First-time buyer relief requires an intention to occupy the property as your only or main residence. It is not relief for buying a rental purely as an investment. HMRC explains that condition here.
For a Scottish or Welsh purchase, use the relevant LBTT or LTT calculation rather than copying the SDLT figure. GOV.UK links to the different tax systems. Recheck current rules before a transaction.
How does the budget change with the purchase price?
The next chart keeps the deposit at 25% and the non-tax costs, works and reserves at £19,100. Only the purchase price, deposit and additional-property SDLT change. Holding other costs fixed makes the comparison easy to follow; it does not suggest they will be identical in real life.
Three purchase prices, one set of assumptions
A cheaper property may require more work, have different tenant demand or produce a weaker investment after costs. Use the full numbers rather than assuming a lower asking price makes a deal better. My guide to purchase price versus market value explores that distinction.
Having the cash to buy is only the first test
You also need to understand the running cashflow. At an illustrative 5% annual rate, interest-only payments on £112,500 would be £468.75 a month. At 7%, they would be £656.25, an increase of £187.50. These are sensitivity assumptions, not current mortgage quotes.
If rent were £1,000 a month and other costs and allowances were £350, that would leave £181.25 before tax at 5%, but a £6.25 monthly deficit at 7%. It excludes capital repayments and any costs outside the £350 assumption. Interest-only borrowing does not repay the loan capital.
Use the mortgage stress calculator to change the rate and your own figures. Then read the fuller £1,000 rent cashflow example. The purpose is to expose assumptions before you rely on them.
Turn the budget into a practical next step
- Separate available investment cash from your household buffer. The net worth calculator can help organise the picture, but net worth is not the same as ready cash.
- Build a complete model. Use the buy-to-let deal calculator, add missing costs and mark every unverified estimate.
- Get the right checks. Verify finance, condition, legal position, rental assumptions and tax with suitable professionals.
- Choose your next milestone. It may be saving more, changing the brief, investigating a deal or deciding it does not work.
A 12-month plan should organise actions around your starting position. It should not require a purchase by an arbitrary deadline if the finances or opportunity are wrong.
Common first buy-to-let budget questions
Is a £25,000 deposit enough to start?
It is 25% of a £100,000 purchase, but it does not cover tax, fees, work or reserves. Our hypothetical £100,000 example needs £49,100 in total cash. Your property, financing and tax position may produce a different figure.
Can I use all my savings for the deposit?
The model should include money needed before and after completion, alongside your personal obligations. A deposit that leaves no room for other costs or problems is an incomplete budget. Assess the full position before committing.
Does the calculator tell me what I can borrow?
No. It models the assumptions you enter. A lender decides what it will lend after assessing its criteria, the property and the application.
Start with your own numbers
Build the budget before you chase the property.
Use the free deal calculator now. If you want a personal roadmap and regular group support while you prepare, explore Starter Club.
Prepared using information checked on 30 September 2026. Check the linked product pages for current availability and terms. This is general property education, not personal financial, mortgage, tax or legal advice. Models and examples are illustrative. Property values and income can fall, and outcomes are not guaranteed.