What Costs Are Involved in Buying an Investment Property?
A 25% deposit on a £90,000 house is £22,500. You'll need closer to £43,000. This is where the other £20,500 goes.
Buying an investment property costs the deposit, stamp duty at the higher rates for additional dwellings, conveyancing, searches, a survey, lender and broker fees, refurbishment, furnishing, and a void before the first tenant moves in. On a £90,000 buy to let with a 25% deposit that’s about £38,400 of cash, against a deposit of £22,500.
Then there’s the reserve, which isn’t a cost until it is. Add that and the honest figure for a £90,000 house is closer to £43,000.
The upfront stack, in full
Here’s every line on 23 Beech Grove in Carlton in Lindrick, bought at £90,000 against a £125,000 original asking price and letting at £850 a month. Ranges are what these typically run at in South Yorkshire and Nottinghamshire. The single figures are what I’ve used in the total.
| Cost | Typical range | This purchase |
|---|---|---|
| Deposit, 25% of price | 20 to 25% | £22,500 |
| Stamp duty, higher rates | 5% up to £125,000 | £4,500 |
| Conveyancing, searches, disbursements | £1,400 to £2,200 | £1,800 |
| Level 2 survey | £400 to £900 | £600 |
| Lender arrangement fee | £0 to £2,000, often 1.5% of the loan | £1,000 |
| Mortgage broker fee | £0 to £995 | £500 |
| Bank transfer and AML checks | £50 to £100 | included |
| Refurbishment | varies entirely | £6,000 |
| Flooring, white goods, furnishing | £1,200 to £3,000 | £1,500 |
| Sourcing fee, if you use one | agreed in writing before work starts | not included here |
| Total cash out | £38,400 |
I haven’t put a sourcing fee in the total because the figure depends on whether it’s a standard buy to let or a refurbishment project, and you get the exact number in writing before any work starts. The model, including the 10% on instruction, 40% at memorandum of sale and 50% on completion staging, is on what it costs.
A Level 3 building survey runs £600 to £1,500 rather than £400 to £900. On anything pre-1930, or anything where the roof looks tired in the photographs, pay the difference. A £700 upgrade that finds a £6,000 problem has paid for itself eleven times over, and it also hands you a builder’s quote to renegotiate with.
Stamp duty: the surcharge is the whole story
If the property will mean you own more than one, you pay the higher rates for additional dwellings, and they start at £40,000 rather than £125,000. That threshold is why the surcharge catches investors who assumed a cheap house meant no stamp duty.
| Band | Standard rates | Higher rates, additional property |
|---|---|---|
| Up to £125,000 | 0% | 5% |
| £125,001 to £250,000 | 2% | 7% |
| £250,001 to £925,000 | 5% | 10% |
| £925,001 to £1.5m | 10% | 15% |
| Above £1.5m | 12% | 17% |
Both tables checked on GOV.UK and the higher rates guidance at GOV.UK on 25 August 2026. The higher rates took effect on 1 April 2025 and the £40,000 threshold has applied since 16 March 2016.
Non-UK resident buyers add a further 2% on top of all of it, which has applied since 1 April 2021. On Beech Grove that’s another £1,800, taking the stamp duty from £4,500 to £6,300 and the total cash in to £40,200.
Worked, on a £70,000 Doncaster or Worksop terrace: nothing on the standard rates, £3,500 at the higher rates, £4,900 if you’re non-resident. I’m not a tax adviser and none of this is tax advice. How the rates apply to your circumstances, including any relief you might qualify for, is a question for your solicitor.
The costs people leave out
This section is the reason the page exists. Every line here is real, every one is regularly missing from a projection, and together they’re worth several percentage points of return.
The void before the first tenant. Completion to first rent is rarely instant. Six to ten weeks is normal if there’s any work to do. That’s £1,275 to £2,125 of rent that never arrives on Beech Grove, and the council tax falls on you while the property sits empty, plus utility standing charges on an empty house.
The tenant find fee. A letting agent typically charges 50 to 100% of one month’s rent to find and reference a tenant, so £425 to £850 plus VAT, and it’s charged again on each new tenancy. High turnover streets pay this more often than anybody models.
Compliance certificates. A gas safety certificate runs £60 to £120 annually. An EICR (Electrical Installation Condition Report) is £150 to £300 and lasts five years. An EPC (Energy Performance Certificate) is £60 to £120 and lasts ten. Small individually, and they arrive whether the property is let or not.
Getting the EPC to where it needs to be. You can’t let a property in England or Wales with an EPC below band E, with improvements up to a £3,500 cap being your responsibility if it falls short. Government has stated an aim for as many privately rented homes as possible to reach band C or equivalent by 2030, with the implementing detail not yet published. See GOV.UK, checked 25 August 2026. On a solid walled Victorian terrace that gap between an E and a C can be several thousand pounds, and it’s a capital cost you should price at offer stage rather than discover later.
Landlord insurance rather than home insurance. A standard residential policy doesn’t cover a let property. Buildings cover with landlord liability runs around £300 a year on this stock, more if the property will stand empty for over 30 days, which most insurers treat as a material change.
The reserve. Hold six months of mortgage payments plus a repair fund. On Beech Grove that’s £1,860 of interest plus around £3,000, so roughly £5,000 sitting unused. That’s the money that means a failed boiler in February is an inconvenience rather than a crisis.
The ongoing annual costs
Once it’s let, this is what comes off the rent every year.
| Annual cost | Beech Grove |
|---|---|
| Mortgage interest, £67,500 at 5.5% interest only | £3,713 |
| Letting agent management, 10% of collected rent plus VAT | £1,122 |
| Maintenance allowance, 10% of gross rent | £1,020 |
| Void allowance, one month | £850 |
| Buildings and liability insurance | £300 |
| Safety certificates, annualised | £180 |
| Total | £7,185 |
Against £10,200 of gross rent, that leaves £3,015. On £38,400 of cash invested it’s a 7.9% return, which is a good outcome and a very long way from the 11.3% gross yield the same property would be marketed at. The arithmetic is stepped out in how to calculate ROI on a buy to let.
The costs that arrive later
Cheap houses are usually old houses, and old houses arrive with their bills bunched together rather than smoothed. On pre-1930 terraced stock across South Yorkshire, none of the following would surprise me in the first five years.
- Boiler replacement: £2,000 to £3,500
- Full rewire: £3,000 to £5,000
- Roof covering: £5,000 to £9,000
- Damp treatment and replastering: £1,500 to £4,000
Then the exit, which nobody budgets for at the buying stage. Selling agent fees of 1 to 2% plus VAT, conveyancing of £900 to £1,500, an early repayment charge if you’re inside a fixed term, and Capital Gains Tax on the gain. Residential property CGT is charged at 18% within the basic rate band and 24% above it, with an annual exempt amount of £3,000 for the 2026 to 2027 tax year, per GOV.UK, checked 25 August 2026. Whether personal or company ownership serves you better is an accountant’s question, and there’s background in UK company vs personal ownership.
How much do I actually need to buy a £90,000 property?
Around £43,400. That’s £38,400 of purchase and setup costs plus a £5,000 reserve, or £45,200 if you’re buying from overseas and paying the extra 2% surcharge.
The deposit is £22,500 of that. So the deposit is a little over half of what you need, which is the single most useful sentence on this page. If your entire capital is the deposit, you can’t yet buy this house, and the deal that goes wrong is almost always the one bought with nothing left over.
What this means for you
Model the full stack before you offer, not after the survey. The costs above are the difference between an 11.3% headline and a 7.9% reality, and knowing that gap is also what tells you the price you should be paying, which is the subject of how to negotiate the price of an investment property.
Bullseye Properties builds this cost model on every property before a client sees it, including the lines above that never appear on a listing. If you want it built on something you’re looking at, send it over.
Connor, Bullseye Properties Ltd