How to Analyse Rent to Rent Deals: A UK Investor's Guide

Updated: February 2026 • 8 min read

Rent to Rent (R2R) is one of the lowest-capital ways to get into property investing. But the low barrier to entry is also its biggest risk — too many people jump in without properly analysing the deal first.

This guide shows you exactly how to analyse an R2R deal before you commit, so you know whether it's profitable before you sign anything.

What You'll Learn

• The 5 numbers you must calculate before any R2R deal
• How to estimate realistic room rents
• The break-even occupancy formula (most people miss this)
• Red flags that kill R2R profitability

The 5 Numbers That Matter

1. Gross Room Income

This is the total rent you'd receive if every room was occupied every month. Research actual room rents in your area using SpareRoom, Rightmove, and OpenRent.

2. Total Monthly Costs

Everything you'll pay out each month:

• Rent to landlord — your guaranteed payment
• Council tax — check the band, HMOs often pay full rate
• Gas & electric — budget £50-60 per room per month for HMOs
• Water — typically £20-25 per room per month
• WiFi — £30-40/month, essential for tenants
• TV licence — £13/month if you provide TVs
• Insurance — landlord contents, typically £40-60/month
• Cleaning — communal areas, weekly or fortnightly
• Maintenance reserve — budget £50-100/month for repairs

3. Net Monthly Profit

Simple maths: Gross Income − Total Costs = Net Profit

For a viable R2R deal, aim for at least £400-500/month net profit. Anything less and you're working for minimum wage once you factor in your time.

4. Setup Costs

The money you need upfront:

• Deposit (typically 2 months' rent)
• First month's rent in advance
• Furniture (if not included) — budget £500-800 per room
• Safety certificates — gas safe, EICR, PAT testing (~£300)
• HMO licence (if required) — £500-1,500 depending on council
• Legal fees — contract review (~£200)

5. Break-Even Occupancy

This is the number most investors ignore — and it's the most important.

Break-even occupancy = Total Costs ÷ Gross Income × 100

For example:

This means you need 76% occupancy just to cover your costs. With 5 rooms, that's roughly 4 rooms occupied.

How to Research Room Rents

1. Search SpareRoom for your exact area
2. Filter by "rooms available now" (not just listed)
3. Note the range — you'll likely achieve the middle, not the top
4. Check how long rooms have been listed (over 4 weeks = overpriced)
5. Factor in room size — larger rooms command higher rents

Red Flags to Avoid

• Landlord wants more than 2 months deposit — ties up too much capital
• No break clause — you need an exit if it doesn't work
• EPC rating E or below — potential compliance issues from 2028
• Low rental demand — if rooms sit empty, so does your profit
• Profit margin under 20% — too little buffer for unexpected costs

A Real Example

Let's analyse a 5-bed semi-detached in a commuter town:

Net Profit: £705/month
Break-even occupancy: 74%
Verdict: Good deal — healthy margin and achievable break-even

Summary

Before committing to any Rent to Rent deal:

1. Calculate realistic gross income from actual room rents
2. List ALL your costs — don't underestimate bills
3. Check your break-even occupancy is under 80%
4. Aim for £500+ monthly profit minimum
5. Watch for red flags that kill profitability

The best R2R deal is one where the numbers work even with one room empty. If you need 100% occupancy to make money, it's not a good deal.