Rental Yield Calculator

Gross rental yield is calculated by dividing the annual rental income by the property purchase price and multiplying by 100. A property bought for £250,000 that brings in £1,000 a month gives a gross yield of 4.8%, while a £200,000 property at the same rent collects £12,000 a year for a 6% gross yield. This simple metric lets you compare properties quickly across different price points and locations, which is why agents and listing sites quote it so freely. It also flatters every property, because it ignores what a landlord spends to keep the rent coming in.

Net rental yield accounts for those costs. They include mortgage payments, letting agent fees (typically 8-15% of rent), maintenance (budget 10-15% of rent), landlord buildings and contents insurance at around £200-£500 a year, a gas safety certificate at £80-£120 a year, an EPC at £45-£120 (valid for 10 years), ground rent, service charges, void periods of typically 2-4 weeks a year between tenants, and landlord income tax. The net figure is always significantly lower than the gross and usually lands at 50-70% of it. A £200,000 property with £12,000 of rent and £3,500 of costs keeps £8,500, which is a net yield of 4.25%.

This calculator produces both gross and net yield figures. Enter the property price, monthly rent and running costs to see your return, along with the annual cash flow after all expenses, which is the real measure of whether a rental property covers its costs. The worked example on this page shows how thin that margin can be: £1,350 a month on a £300,000 property is a respectable 5.4% gross, yet once the mortgage, agent, maintenance, insurance and voids are deducted the net yield is 0.58%. Be honest with the cost inputs, since many purchases that look sound on gross yield lose money once every outgoing is counted.

What counts as a good yield depends on where you buy. In 2026 London typically returns 4-5% gross and the South East 5-6%, Manchester and Birmingham sit around 6-7%, and Liverpool, Newcastle and Sheffield reach 7-9%. Some properties in deprived areas yield 10%+, but with higher voids and management problems. There is a trade-off with capital growth. The expensive areas with the lowest yields have historically grown 5-7% a year, Manchester, Liverpool and Leeds combine 6-8% yields with 4-6% growth, and low-cost parts of the North East, Wales and Yorkshire offer 8-12% yields with only 2-4% growth. Experienced landlords often mix high-yield cash-flow properties in the north with capital-growth properties in the south and the big cities.

Tax has been squeezing yields since 2017. Section 24 of the Finance Act 2017 phased out mortgage interest relief for individual landlords, and from April 2020 interest can no longer be deducted as an expense at all. A 20% tax credit applies instead. Take rental income of £15,000 with £8,000 of mortgage interest. Under the old rules the taxable profit was £7,000, so the tax was £1,400 at 20% or £2,800 at 40%. Now the full £15,000 is taxable before the £1,600 credit is applied, and a higher-rate landlord pays £4,400 rather than £2,800. Some 40% taxpayers face a tax bill on a property that made a pre-tax loss. Many investors therefore hold property in a limited company (an SPV) to keep full interest deductibility and pay 25% Corporation Tax instead of 40-45% personal rates. Incorporation costs around £500 and accounts roughly £1,500 a year, which tends to pay off from 2-3 properties or £30k+ of rental income.

Yield is only half of the return. True buy-to-let return is annual rental profit plus capital growth. A £200k property at 4% net yield produces £8,000 of profit, and if it appreciates 4% a year that adds another £8,000 of capital gain, so the total return is £16,000, or 8% on £200k. Top investors target a net yield above 5% together with realistic capital growth of 3-5% a year, so that the combined figure beats the roughly 7% available from a diversified equity portfolio. Borrowing magnifies the outcome. With a 75% loan-to-value mortgage and a £50k deposit, the geared return is £16k less £8,250 of mortgage interest at 5.5%, which is £7,750 on £50k, a 15.5% return on equity. Gearing cuts both ways: if prices fall 4% instead, the £8,000 capital loss plus the interest leaves you £8,250 down, -16.5% on your equity.

Financing terms shape the cash flow. Buy-to-let mortgages in 2026 typically charge 5.5-6.5% plus arrangement fees, lend up to 75% of the value and apply a 125-145% rental cover stress test. At those rates a property generally needs a gross yield of 7%+ to be cash-flow positive, and anything below 7% relies on capital growth, which is speculative. Since Oct 2024 an additional property also carries a 5% SDLT surcharge on top of the standard rates. Letting through Airbnb can lift the gross yield, but some councils require planning permission for short lets (London applies a 90-day rule).