Break-Even Rent Calculator
The break-even rent is the minimum monthly rent needed for a property to cover all its costs and generate zero profit. Any rent above this level is profit; any rent below it means you are subsidising the property from personal funds. Knowing your break-even rent — and comparing it to achievable market rent — is one of the most important checks before any buy-to-let purchase.
Why this matters
Purchasers who buy before calculating break-even rent sometimes discover that achievable market rent barely covers their costs — leaving no margin for voids, maintenance, or rate rises.
Key points
- Break-even rent = total monthly costs (mortgage + management fee + insurance + maintenance + reserves)
- Market rents often have a ceiling — if break-even requires above-market rent, the deal doesn't work
- Adding a profit margin above break-even ensures a buffer for unexpected costs
- Rising mortgage rates increase break-even rent — always model different rate scenarios
- Break-even should include a void allowance — not just costs during an occupied period
- Breaking even on a property with strong capital growth might still be a viable long-term strategy
Frequently asked questions
How do I calculate my break-even rent?
Add up all your monthly costs: mortgage payment, management fee (if used), buildings insurance, monthly maintenance reserve, and any other fixed costs. This total is your break-even rent. Add a target profit margin to get your minimum acceptable rent.
What happens if market rent is below my break-even?
If achievable market rent is below your break-even rent, the property will run at a cash flow loss. You must fund this shortfall from personal income. This is a viable strategy only if capital growth prospects are compelling and you can sustain the shortfall indefinitely.
How should I account for void periods in break-even?
Divide your expected annual void cost (weeks of void × weekly rent) by 12 and add this to your monthly break-even calculation. This ensures the rent you charge actually covers you even when the property is occasionally empty.
Does break-even rent include tax?
Standard break-even calculations focus on cash costs. Tax is an additional consideration — add approximately 20–40% of your rental profit to your total annual cost to estimate your tax liability and ensure you're setting aside sufficient funds.