Property Comparison Tool UK

When to use this tool

This tool is designed for the specific moment when you have narrowed a property shortlist down to two or three candidates and need to compare them objectively before deciding which to pursue. It is most useful when the properties are genuinely different — different prices, different expected rents, different locations with different growth assumptions — and you want to see the trade-offs laid out clearly rather than trying to hold multiple mental models at once.

It is less useful for a very early-stage exploration (where a simple yield calculator is faster) or for analysing a single property in depth (where the Property Deal Analyzer covers more metrics and provides a scored verdict). This tool's strength is the side-by-side comparison: seeing that Property A has stronger cash flow while Property B has stronger projected equity in the same view is exactly the kind of insight that shapes decisions.

Understanding each metric in detail

Gross yield — annual gross rent as a percentage of the purchase price. The simplest measure of rental income return. Does not account for vacancy, running costs or mortgage. Useful for quick filtering; insufficient on its own for investment decisions.

Net yield — annual gross rent minus annual running costs (management fees, maintenance, insurance, other costs), expressed as a percentage of purchase price. This is your income return before mortgage payments. A net yield below 4% on a mortgaged property will typically produce negative cash flow at current rates.

Monthly cash flow — net annual income (after running costs and interest-only mortgage payment) divided by 12. This is the actual money left over each month after the mortgage and running costs are paid. Positive cash flow means the property is self-funding from day one; negative means you are subsidising it from other income.

Cash-on-cash ROI — annual net cash flow divided by the total cash invested (deposit plus upfront costs like SDLT, legal fees and any refurbishment). This measures the return on the actual cash you put in, making it the most directly comparable metric across properties at different price points. A 6%+ cash-on-cash return is generally considered strong at current UK mortgage rates.

5-year projected equity — combines your entered annual growth rate (compounded over 5 years on the purchase price) with an estimated mortgage balance reduction to project your equity position in year 5. This is illustrative, based on your growth rate assumption. It is sensitive to the growth rate entered — be conservative. Actual outcomes depend entirely on real market movement and your specific mortgage terms.

How to read the comparison

Each metric is calculated the same way for every property entered, so the comparison is genuinely apples-to-apples — gross and net yield, monthly cash flow after mortgage and running costs, cash-on-cash return on the actual cash invested (deposit plus upfront costs), and a simple 5-year projected equity position combining mortgage paydown assumptions with your entered growth rate. The trophy marks whichever property wins each individual row — a property rarely wins every row, which is exactly the point: the right choice usually depends on which metric matters most for your specific goal (income now vs. growth later).

This tool deliberately doesn't produce a single combined "winner" grade the way the Property Deal Analyzer does for a single property — comparing multiple deals is about seeing the genuine trade-offs side by side, not collapsing them into one number that could hide exactly the difference you're trying to evaluate.

Frequently asked questions

Leasehold, freehold and service charges

Tenure affects the true cost comparison more than many investors initially account for. Leasehold properties — most flats and some houses — carry two recurring costs that freehold properties do not: service charges and, in older leases, ground rent. Service charges cover the cost of maintaining the building, communal areas, lifts, external decoration, buildings insurance and block management. On a small ex-council flat this might be £800–£1,500 a year; on a large managed new-build development it can easily reach £3,000–£5,000 or more. Ground rent, where still payable, adds a further annual cost.

Both service charges and ground rent should be included in the "annual running costs" field when comparing a leasehold property against a freehold one. Omitting them overstates the leasehold property's net yield and cash flow, making an expensive-to-run flat appear to outperform a cheaper-to-run house when the underlying economics tell the opposite story.

Lease length is a qualitative factor this tool cannot score. A property with fewer than 80 years remaining is generally harder to mortgage and harder to resell, and extending the lease incurs significant legal and premium costs. If the properties you are comparing have materially different lease lengths, note this as a separate risk consideration — it does not appear in any yield figure but can materially affect long-term value and exit flexibility.

Worked example: when the cheaper property wins on cash flow

Consider two properties: Property A costs £220,000 and achieves £1,050 per month rent. Property B costs £160,000 and achieves £800 per month rent. On gross yield alone, Property A yields 5.7% and Property B yields 6.0% — a modest gap in Property B's favour.

Once you factor in a 25% deposit on each at a 5.0% mortgage rate, plus annual running costs of £3,000 for the larger Property A versus £2,000 for Property B, the cash flow picture sharpens significantly. Property A's monthly cash flow after interest and running costs is approximately break-even or slightly negative. Property B's is meaningfully positive — the smaller loan means a much lower monthly interest charge, and the lower running costs compound the advantage. Property A's higher purchase price requires more capital deployed in the deposit and in the mortgage interest that erodes the rental income.

However, at 3% annual growth, Property A generates roughly £6,600 of gross capital appreciation in year one — around 50% more in absolute terms than Property B's £4,800. Over five years, Property A's projected equity substantially exceeds Property B's, assuming both grow at the same rate.

This is precisely the trade-off the comparison table is built to reveal: Property B is the income-now choice; Property A is the growth-later choice. Neither is wrong — the right answer depends on whether you need cash flow from month one or are prepared to fund a shortfall in exchange for higher projected capital gains.

Common comparison mistakes

Using different growth rate assumptions for properties in the same area. If two properties are in the same postcode or comparable neighbourhoods, they should receive the same growth rate assumption unless you have a specific, justified reason for the difference. Entering 4% for one and 2.5% for another without a rational basis distorts the 5-year equity comparison in favour of whichever property got the higher rate — not because it is a better deal, but because of an input assumption.

Forgetting to include SDLT and legal fees in upfront costs. Total upfront costs vary significantly between properties depending on purchase price, buyer status (first-time buyer versus additional property), and whether the 5% additional dwelling surcharge applies. A £180,000 first property has a very different total upfront cost to a £250,000 second property. Use the Stamp Duty Calculator to get an accurate SDLT figure for each property before entering the comparison — approximating as a flat percentage will produce the wrong cash-on-cash ROI.

Underestimating maintenance costs. The common 1% of property value per year rule is a starting point, not a ceiling. Older properties, those requiring cosmetic work, or properties with shared fabric (roofs, drains, external walls) typically run higher. Applying the same low maintenance assumption to a new-build flat and a 1970s terrace house inflates the apparent profitability of the older property and makes the comparison unreliable.

Comparing a mortgaged property to a cash purchase without adjusting. If one candidate will be mortgaged and another purchased with cash, the cash-on-cash ROI figures are not comparable at the same mortgage rate. To model a cash purchase, set the deposit equal to the full purchase price — this zeroes out the mortgage interest in the calculation and gives the correct cash-on-cash figure for an unencumbered property.

When this tool is not enough

This tool handles up to three properties across five financial metrics. There are several situations where it should be supplemented with more detailed analysis before making a decision.

More than three candidates: use the comparison in elimination rounds — compare your top three, remove the weakest, add the next candidate — until you reach a clear frontrunner. For very large shortlists, a spreadsheet built to your own weighted criteria is more practical than any fixed-metric tool.

Complex holding structures: limited company versus personal ownership, portfolio landlords with Section 24 mortgage interest relief implications, mixed-use properties, or any commercial element all require tax-aware analysis this tool does not provide. A property accountant or specialist tax adviser is needed before committing to a deal in any of those situations.

HMO or serviced accommodation: these property types have materially different cost structures, licensing requirements and income volatility compared to standard single-let BTL. The HMO Calculator models HMO-specific costs and room-by-room income more accurately than a general yield comparison.

Before making any offer: always verify actual achievable rent with local letting agents, obtain an independent survey, and confirm all purchase costs — including your specific mortgage terms — with your solicitor and mortgage broker before committing.

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