Most landlords know:

• what their property is worth
• what rent they collect
• what mortgage they pay

Rather fewer appreciate:

• how much of the rent actually reaches them
• what proportion goes to HMRC
• how much is lost to borrowing costs
• and therefore how sensitive their returns are to interest rates, fines, voids and regulation

This tool reveals exactly that.

 You'll discover:

✓ Where every pound of rent goes

✓ Your real after-tax return

✓ Your effective tax rate

✓ Whether you're relying on income or house-price growth

✓ How resilient your investment really is

Many landlords are surprised by the results. Let's find out where your property stands.

 

Copyright: Northwood Leicester 2026

Rental Income from the Property

Property Value

Tax-Deductible Costs (e.g. maintenance & repairs, letting agency commission)

Mortgage and Tax Status

Where Did Your Rent Go?

Annual Rent: £{soYour36}

Mortgage Interest: £{mortgageLender164}

Tax: £{hmrc}

Running Costs: £{runningCosts161}

You Keep: £{youKeep}

So, for every £100 of rent:

£{forEvery} went to the lender

£{forEvery230} went to HMRC in tax

£{forEvery231} covered operating costs

£{forEvery232} remained with you

 

Many landlords may be surprised to discover the proportion of the rent collected that they retain:

You collected £{annualRent} in rent

You retained £{youKeep}

 

Here's your effective tax rate:

{effectiveTax}

Basic rate tax payers will not see any undue loading against them. But higher rate tax-paying landlords may be surprised by this figure. 

The reason is Section 24.

 

What changed?

Before Section 24, mortgage interest was treated like a normal business expense.

Today, it isn't.

You still pay the mortgage interest, but it no longer fully reduces the profit that HMRC taxes.

As borrowing costs rise, your real profit can fall quickly, while your tax bill may not fall at all.

That's why effective tax rates can become surprisingly high.

 

And this helps explain why you retained £{youKeep} from £{annualRent} of rent collected

Remember, too, that your rental income is added to your other income (e.g. from employment) in order to arrive at your total income that determines whether you have become a higher rate tax-payer. So someone with relatively modest main income plus perhaps just one rental property, could be propelled into the higher rate band quite quickly. Check your position to be sure of your tax-band status.

This is how much of your Total Annual Return is coming from:

a) Growth in Value of the Property

{capitalValue}

 b) Rental Income Cashflow

{annualRental}

 

Landlords might assume their rent is doing most of the work - certainly the early buy-to-let principles made this the default assumption. In fact it was the very reason many landlords got into this in the first place.

In reality, modern buy-to-let may instead rely heavily on long-term capital growth.

That's not necessarily a problem — but it does mean your investment success increasingly depends on future property values rather than today's cashflow. Tax treatment of landlords has changed the environment completely.

And it doesn't undermine property as a worthwhile investment, but it does throw heavy emphasis on making the rental work to your complete advantage, removing all rental risks.

What Return on Capital Employed is your rental property generating?

This is perhaps the crunch question: we now see how much after tax rental income your property is generating, so what percentage return is this on the capital you have invested?

This may be right up to where you need it to be and delivering a great return versus other forms of investment...or it may shock you. For many landlords with a relatively high level of gearing Section 24 has limited the rental investment returns: it's all about the level of your mortgage and the restriction on relief before tax applies.

Here is your figure for INCOME ROCE - the part that comes from Annual Rental Cashflow:

{incomeRoce}

And here is your total ROCE, Return on Capital Employed from Capital plus Income

{totalRoce}

So let's look at the split of income landlord vs. HMRC

We'll treat this as though you are investing today, with the costs and taxes that an investment gives rise to right now.

(Of course, you may have invested a good while ago when purchase stamp duty costs were more benign, but here we look at an investment through the lens of HMRC's total take in today's environment)

SDLT rates for investment / additional residential property

Stamp Duty on additional residential property purchases is calculated in bands, meaning different portions of the purchase price are taxed at different rates.

Price Band	Rate
Up to £125,000	5%
£125,001 – £250,000	7%
£250,001 – £925,000	10%
£925,001 – £1,500,000	15%
Over £1,500,000	17%

Each band applies only to the portion of the price within that range.

Your First-Year Rental Income

After-tax rental income:

{posts24Aftertax208}

 

HMRC's First-Year Take

Stamp Duty Land Tax:

{totalSdlt269}

Income Tax:

£{hmrc}

Total First-Year Government Take
£{totalHmrc}

 

(If you achieve capital growth you could add

{yourAnnual244} to your first year return)

To make that comparison very clear: first year, HMRC makes {totalHmrc279} times what the landlord does from rental cashflow

The landlord of course may see capital growth - over time - but that is not first year income.

Over a ten-year ownership horizon the landlord share of income generated should match or exceed the HMRC share (see below), but typically that can take several years. And this only happens after funding the acquisition and managing the rental throughout, with all the associated costs of maintenance and management that the private landlord has borne. Were these council houses that burden and the risk would fall entirely upon the state.

Important Context

This is largely because SDLT is collected immediately, while landlords typically build wealth gradually through rental income and long-term property appreciation.

This does not mean property investment is unattractive.

In fact, many successful landlords create substantial long-term wealth.

However, it highlights why:

• cashflow matters
• tax efficiency matters
• compliance matters
• professional management matters

When margins are thin, every avoidable cost has a much larger impact on long-term returns.

To be explicit about the true costs that all landlords know they face

This model has to ignore some of the truths that landlords expect:

• no major capital expenditure
• no major voids
• no bad debt
• no regulatory penalties

So let's be clear: like any projection, real-world outcomes may be higher or lower depending on market conditions, maintenance requirements and tenancy performance.

Let's assume you buy the investment to hold for ten years and then sell (bringing CGT into the equation)

Basic assumptions:

• Holding period: 10 years
• Rent growth: 2.5%
• Property value growth (your input): {expectedAnnual}%

How does the rental perform as an investment over the long term?

Over ten years:

• Rent collected totals approximately {tenyearRent286} with inflation
• You actually retain approximately {tenyearNet} after tax and finance costs

Of course, the other side of the investment is the capital growth in value

• Your property grows from £{number} to {propertyValue}
• You pay Capital Gains Tax on that (ignoring the small allowance) of {capitalGains}
• So after CGT, you retain approximately {netCapital} of that growth

 

Overall Outcome

Your total benefit over ten years is approximately:

{landlordTotal}

Over the same period, HMRC receives approximately:

{hmrcTotal}

through SDLT, Income Tax and Capital Gains Tax.

 

Share of Wealth Created

Landlord share: {landlordShare} vs. HMRC share: {hmrcShare}

 

The Key Insight

Property can be a highly effective long-term investment.

However, these figures illustrate why successful landlords need to focus on:

• efficient financing: getting the right level of borrowing at the best rate
• careful compliance - poor management leads to risk
• and risk in the current environment is measured in £'s: court costs, fines, penalties
• professional management is the route to secure, hassle-free investment

Margins for landlords are clearly slim. So whether you manage your rental yourself or employ an agent, the focus has to be on tight compliance and professional standards to give you the best chance of building long-term success.

Our summary

Your investment property delivers a housing solution that is sorely needed

Demand is therefore a given...so your main investment fundamental is sound

And at the same time, you provide very substantial revenue for the state through taxes...

...along with having borne the costs of improvement, maintenance, and upkeep of expensive assets

Good, caring, professional landlords should be applauded for what they do. The best agents help support that outcome - there's a number of levers you can pull, and most important, it's vital to ensure compliance slips don't create big adverse impacts on your investment. 

And for added context...

Landlords do not deserve to be vilified

Uninformed opinions about "greedy landlords" can surface in this sometimes adversarial industry. The reverse is true:

• Landlords provide housing (at their own risk) that the State has opted not to provide
• And landlord taxes fund social good at a level far beyond what most people realise

Would you welcome a chat with the team to consider your options? We are landlords ourselves; we understand the pressures.