Rent vs Mortgage: Cashflow Per Property Explained

What monthly cashflow per property actually means

Monthly cashflow is the cash that lands in your account from a property after the mortgage and every running cost is paid. The simple version: rent in, minus mortgage payment, minus running costs, equals cashflow. It is the number that tells you whether a property feeds you or quietly bleeds you each month.

A lot of landlords only ever look at rent minus mortgage and call the rest profit. That gap is where deals go wrong. This post shows you how to calculate real per property cashflow, why the headline profit figure lies, how interest rates swing the whole thing, and how to stress test before a void or a rate rise catches you out, with a full worked UK example you can copy.

Rent in, minus mortgage, minus running costs

True cashflow is rent received minus the mortgage payment minus every running cost, worked out per month for one specific property. Do it property by property, not as a portfolio blob. The running costs are the part people skip, and they are exactly what turns a "profitable" flat into a break even one.

Start with the rent you actually collect, not the asking rent. Then subtract the mortgage payment. Then subtract the running costs that show up whether the property is let or empty:

• Letting or management fees if you use an agent (often 8% to 12% of rent plus VAT, or 0% if you self manage)
• Buildings insurance and, where relevant, landlord or contents cover
• Maintenance and repairs (set aside a monthly allowance even in quiet months)
• Service charge and ground rent if it is a flat or leasehold
• Gas safety, electrical (EICR) and boiler servicing spread across the year
• Void allowance (money set aside for the weeks the property sits empty)
• Accountancy, mileage and software for running the business

If you are still tracking all of this in a notebook or a single rent column, the running costs are precisely what gets lost. A tool like Build & Let keeps rent, mortgage and the monthly profit figure attached to each property, so the costs you forgot are the ones it remembers. For the broader picture on yield versus profit, see our guide to rental yield and monthly profit.

Profit on paper vs cash in the bank

Profit on paper and cash in the bank are two different numbers, and confusing them is the classic buy to let mistake. Paper profit is an accounting figure used for tax. Cashflow is what actually moves in and out of your account. A property can show a taxable profit while leaving you with less cash, or even nothing, in the same month.

The two pull apart for a few reasons:

• Capital repayment is not an expense. On a repayment mortgage, the chunk that pays down the loan is cash leaving your account, but it is not a tax deductible cost. It hurts cashflow without reducing your tax bill.
• Mortgage interest is treated specially. For individual landlords, interest is no longer a normal deductible expense (more on this below), so your taxable profit can look healthier than your bank balance feels.
• Lumpy costs hit cash, not the monthly average. A new boiler is one painful month of cashflow, even if you spread its "cost" across the year in your planning.

The habit worth building: track cashflow monthly for your own sanity, and track taxable profit separately for HMRC. They answer different questions.

The interest rate effect, and interest only vs repayment

Interest rates are the single biggest lever on buy to let cashflow, because the mortgage is usually the largest cost. When rates move, your payment moves, and on a leveraged property a small rate change can wipe out the whole surplus. The mortgage type changes the picture too: interest only frees up monthly cash, repayment builds equity.

Consider a £150,000 interest only mortgage. At a 4% rate the interest is £6,000 a year, or £500 a month. If your product reverts and the rate becomes 6%, the interest is £9,000 a year, or £750 a month. That is an extra £250 a month leaving your account for the exact same property, with no change to the rent.

The two structures behave very differently:

• Interest only: lower monthly payment, more cash in hand now, but you never pay down the loan and you carry full interest rate risk on the whole balance. Most buy to let mortgages are interest only for this reason.
• Repayment: higher monthly payment and tighter cashflow, but every payment chips away at the debt, so you build equity and shrink your future interest exposure.

Neither is "right". Interest only suits investors chasing monthly yield; repayment suits those who want the property owned outright by a certain date. What matters is that you model your actual rate, not a hopeful one, and assume your fixed deal ends one day.

A worked per property cashflow table

Below is a single property worked through end to end. The numbers are illustrative, but the method is the one to copy: monthly rent, monthly mortgage, each running cost, then the cash left over. This is a self managed flat on an interest only buy to let mortgage.

So the headline "rent minus mortgage" is £700, but the real cashflow is £320. That £380 gap is the running costs the optimistic version ignores. Now watch what one rate rise does: move the mortgage to 6% and the interest becomes £750, so cashflow falls from £320 to £70. The property is still "profitable", but it is one boiler away from a loss month.

Two practical notes. First, if this were a repayment mortgage the payment would be higher still, squeezing monthly cashflow further while building equity you do not see in this table. Second, the tax due on this property is calculated separately and is not a line you simply subtract here, which brings us to the wrinkle.

The tax wrinkle: mortgage interest is no longer fully deductible

For individual (non incorporated) landlords, mortgage interest is no longer deducted from rental income as a normal expense. Instead you get a tax reduction worth the basic rate of income tax on your finance costs. According to GOV.UK, this restriction was phased in from April 2017 and has applied in full since 6 April 2020.

In plain terms, your taxable rental profit is now worked out almost as if the mortgage interest did not exist, and then your final tax bill is reduced by a credit of 20% of that interest. GOV.UK confirms the basic rate is 20%, so a landlord paying £6,000 a year in mortgage interest gets a tax reduction of about £1,200, not full relief at their own tax rate.

This matters most if your total income tips you into the higher rate. For 2025 to 2026 the basic rate band runs to £37,700 above the personal allowance, with the higher rate starting at £50,270, per GOV.UK. Because rental profit is now counted before the interest credit, the extra income can push you up a band, so a higher rate landlord effectively gets relief at 20% on interest while paying 40% on the profit. Some landlords respond by holding property in a limited company, where interest is treated differently, but that carries its own costs and trade offs.

This is genuinely fiddly and the right answer depends on your whole income. This post is not tax advice. Speak to a qualified accountant before you decide how to hold a property or how to model your after tax cashflow. The point here is simpler: do not assume your full mortgage payment shelters your rent from tax, because for individuals it no longer does.

Why you need a per property view across a portfolio

A per property view stops a loss making property from hiding inside a healthy looking total. When you add up the whole portfolio, a strong flat can mask a weak one, and you keep feeding the weak one without realising. Cashflow has to be tracked one property at a time, every month, or problems stay invisible until they are large.

Picture three properties. Two throw off £300 a month each and one quietly costs you £150 because the service charge jumped and the rent has not. The portfolio total still reads "+£450 a month", so on a spreadsheet summary everything looks fine. The loss maker is invisible. A per property view shows it immediately and lets you act: review the rent, challenge the service charge, refinance, or in the worst case sell.

This is also how you spot the properties worth scaling and the ones dragging on your time. If you are growing a portfolio, the per property habit is what keeps it healthy as it gets bigger, a theme we cover in scaling a property portfolio. It also feeds straight into the wider numbers in our property developer KPIs guide.

Stress testing for voids and rate rises

Stress testing means rerunning your cashflow on bad but realistic numbers before they happen: a long void, a rate rise, or both at once. If the property survives the stressed numbers, you can sleep. If it does not, you find out now, while you still have options, rather than in the month the tenant leaves and the fix rate ends together.

Run three scenarios for every property:

1. Void test. Assume the property is empty for two months and you still pay the mortgage and standing costs. Can you cover it from reserves without panic?
2. Rate test. Reprice the mortgage 2 to 3 percentage points higher, the kind of jump landlords saw when cheap fixes ended. Does it still cashflow, or does it go negative?
3. Combined test. A void and a rate rise in the same quarter. This is the one that catches people, because trouble rarely arrives politely on its own.

The practical defences are boring and they work: keep a cash reserve per property (a few months of mortgage and costs), track when each fixed rate expires so a remortgage never surprises you, and chase rent reviews so income keeps pace with cost. Knowing exactly when rent lands and when deals end is half the battle, which is why we wrote a guide on tracking rent due dates.

Frequently asked questions

How do I calculate cashflow on a buy to let?

Take the rent you actually collect each month, subtract the mortgage payment, then subtract every running cost: insurance, maintenance, any agent or service charge, safety certificates, a void allowance and software. What remains is your true monthly cashflow. Do it per property, not across the whole portfolio.

Is interest only or repayment better for cashflow?

Interest only gives stronger monthly cashflow because you only pay interest, which is why most buy to let mortgages use it. Repayment tightens monthly cashflow but pays down the loan, building equity and cutting future interest. The right choice depends on whether you want maximum monthly income or to own the property outright.

Can I still deduct my mortgage interest as a landlord?

Not in full as an individual landlord. Since 6 April 2020, finance costs are not deducted from rental income; instead you get a tax reduction worth 20% of the interest, per GOV.UK. Limited companies are treated differently. Ask an accountant about your specific situation.

What is a safe cashflow buffer per property?

A common approach is holding several months of mortgage and standing costs in reserve for each property, so a void or a repair does not force a panic decision. The right figure depends on your risk appetite and how many properties you hold, but per property reserves beat one shared pot that empties fast.

Why does my property show a profit but no spare cash?

Because taxable profit and cashflow are different. Capital repayment leaves your account but is not a deductible expense, and mortgage interest now only earns a 20% credit rather than full relief, so your taxable profit can look healthier than your bank balance. Track cashflow monthly and tax separately.

Try it on your own numbers

If you want to see real cashflow per property without wrestling a spreadsheet, Build & Let keeps rent, mortgage and monthly profit attached to each property and tracks when rent is due across your whole portfolio, so no loss maker hides. Start the 14 day free trial, plug in your own figures, and find out which properties are actually feeding you. No tax advice, just a clear view of the cash.