Rental Yield Calculator
Last updated: April 2026
Property Details
£
£
Mortgage
Use the Mortgage Repayment Calculator for this figure.
£
For tax planning. Mortgage interest relief is restricted for individual landlords.
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Annual Costs
£
£
%
Average void between tenancies. 2 weeks is reasonable for many areas.
wks
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Yield Summary
Annual rent£14,400.00
Gross yield5.76%
Annual costs-£4,094.27
Annual net income£10,305.73
Net yield4.12%
After mortgage-£494.27/year
Cash-on-cash return-0.61%
Yield Benchmark
< 4%PoorMay struggle to cover costs
4-5%ModerateMarginal investment case
5-7%GoodPositive cash flow likely
> 7%ExcellentStrong investment
Annual Cost Breakdown
Maintenance£1,500.00 (10.42% of rent)
Insurance£600.00 (4.17% of rent)
Management fee£1,440.00 (10.00% of rent)
Void period loss£554.27 (3.85% of rent)
Ground rent£0.00 (0.00% of rent)
Service charge£0.00 (0.00% of rent)
Total£4,094.27 (28.43% of rent)
Total Investment
Deposit£62,500.00
Stamp duty (est.)£13,750.00
Legal/other£5,000
Total investment£81,250.00
Cash-on-cash return-0.61%
Buy-to-let tax changes
Mortgage interest tax relief is restricted to the basic rate of 20% for individual landlords. This significantly reduces after-tax returns for higher-rate taxpayers. Your actual after-tax income will depend on your total income. Speak to an accountant about your specific situation.
About this calculator
The Rental Yield Calculator estimates gross and net rental yield for a buy-to-let or investment property. It helps landlords and investors compare rent, purchase price, mortgage costs, service charges, maintenance, void periods, letting fees, tax assumptions, and other ownership costs. Use this expanded guide when you need more than a quick result. It explains the assumptions behind the Rental Yield Calculator, the records to gather, and the decisions the estimate can support. It is especially useful for landlords, buy-to-let investors, homeowners considering letting, and property buyers comparing rent against purchase price and ongoing costs. The strongest use of the page is scenario comparison: change one input at a time, compare the output, and keep a note of which assumption changed.
Rental yield calculation method
Gross yield compares annual rent with the property value. Net yield subtracts recurring costs before comparing the remaining income with the investment value. The calculator result depends on the quality of the inputs and on the rule set or formula selected in the calculator above. For practical use, treat the output as a structured estimate: start with the core inputs, review the main outputs, then test the decision points that matter most to your situation. Key decisions include whether gross yield is misleading, whether net cash flow covers costs, how voids and repairs change the investment return.
- gross yield = annual rent / property value x 100
- net yield = (annual rent - annual costs) / property value x 100
- cash yield = annual net cash flow / cash invested x 100
- better estimate = accurate inputs + correct rule set + realistic assumptions
- scenario difference = revised result - original result
How to use the rental yield calculator
- Enter the purchase price or current property value.
- Enter monthly rent and expected void periods.
- Add mortgage interest, insurance, service charges, repairs, agent fees, and licensing costs.
- Review gross yield, net yield, and monthly cash flow.
- Compare properties using the same assumptions so the result is fair.
- Gather the main inputs first: property value, monthly rent, void period assumption.
- Check supporting records such as rental valuation and mortgage illustration before relying on a final number.
- Enter one realistic scenario first, using conservative assumptions where the future is uncertain.
- Review the main outputs: gross yield, net yield, monthly cash flow.
- Run at least one alternative scenario so you can see which input changes the answer most.
- Compare the result with HMRC property income guidance and lender/landlord compliance guidance or the relevant contract, bill, statement, or professional document.
- Keep the calculation date and assumptions with your notes so you can revisit the estimate when rates, rules, or circumstances change.
Worked example
Simple gross yield
Input: Property value GBP240,000 and rent GBP1,200 per month
Calculation: Annual rent GBP14,400 / GBP240,000 x 100
Result: Gross rental yield is 6.0% before costs.
Void period scenario
Input: A property earns GBP1,200 per month but has one empty month each year.
Calculation: Annual rent is reduced from GBP14,400 to GBP13,200 before costs.
Result: Net yield falls even though the advertised monthly rent has not changed.
Service charge scenario
Input: A flat has strong rent but annual service charges and ground rent of GBP2,400.
Calculation: Recurring ownership costs are deducted from annual rent.
Result: The calculator shows why net yield is more useful than gross yield.
Gross yield versus net yield
Gross yield is quick but incomplete. Net yield is usually more useful because a landlord must pay for repairs, insurance, safety checks, letting fees, voids, mortgage interest, and sometimes licensing. A high gross yield can still produce weak cash flow if costs are heavy.
What to check before relying on the result
A useful Rental Yield Calculator result starts with the same evidence you would use if you were checking the answer manually. The calculator can organise the arithmetic, but it cannot know whether a payslip is final, a bill is estimated, a quote excludes fees, or a personal circumstance has changed since the last statement.
Before making a decision, compare the calculator result with the source document that controls the real outcome. For this topic, that usually means checking HMRC property income guidance and lender/landlord compliance guidance. If there is a difference between the calculator and an official statement, contract, assessment, or professional advice, treat the official document as the stronger source.
- rental valuation
- Use this as supporting evidence for the calculation. If it is out of date, estimated, or based on a different period, the calculator output may look precise while still being wrong for the decision.
- mortgage illustration
- Use this as supporting evidence for the calculation. If it is out of date, estimated, or based on a different period, the calculator output may look precise while still being wrong for the decision.
- service charge accounts
- Use this as supporting evidence for the calculation. If it is out of date, estimated, or based on a different period, the calculator output may look precise while still being wrong for the decision.
- insurance quote
- Use this as supporting evidence for the calculation. If it is out of date, estimated, or based on a different period, the calculator output may look precise while still being wrong for the decision.
- repairs budget
- Use this as supporting evidence for the calculation. If it is out of date, estimated, or based on a different period, the calculator output may look precise while still being wrong for the decision.
Inputs that usually change the answer
The most important input is not always the largest number on the form. Sometimes a date, threshold, percentage, eligibility flag, or timing assumption changes the result more than the headline amount. This is why scenario testing is more useful than a single calculation.
| Input | Why it matters | What to double-check |
|---|---|---|
| property value | It feeds directly into the estimate or changes which rule is applied. | Check the period, units, eligibility, and whether the figure is final or estimated. |
| monthly rent | It feeds directly into the estimate or changes which rule is applied. | Check the period, units, eligibility, and whether the figure is final or estimated. |
| void period assumption | It feeds directly into the estimate or changes which rule is applied. | Check the period, units, eligibility, and whether the figure is final or estimated. |
| mortgage interest | It feeds directly into the estimate or changes which rule is applied. | Check the period, units, eligibility, and whether the figure is final or estimated. |
| agent fees | It feeds directly into the estimate or changes which rule is applied. | Check the period, units, eligibility, and whether the figure is final or estimated. |
How to interpret the output
The output should be read as a decision aid, not just a number. For Rental Yield Calculator, the useful question is often what the result means for timing, affordability, eligibility, comparison, or next steps.
- gross yield
- Use this output alongside the other results rather than in isolation. A monthly amount, percentage, date, or payback figure can look acceptable until fees, timing, evidence, or eligibility conditions are added.
- net yield
- Use this output alongside the other results rather than in isolation. A monthly amount, percentage, date, or payback figure can look acceptable until fees, timing, evidence, or eligibility conditions are added.
- monthly cash flow
- Use this output alongside the other results rather than in isolation. A monthly amount, percentage, date, or payback figure can look acceptable until fees, timing, evidence, or eligibility conditions are added.
- cash-on-cash return if deposit is entered
- Use this output alongside the other results rather than in isolation. A monthly amount, percentage, date, or payback figure can look acceptable until fees, timing, evidence, or eligibility conditions are added.
Scenarios worth comparing
A single estimate is a snapshot. A better approach is to save a base case, then adjust one assumption at a time. This shows whether the result is stable or whether a small change in timing, rate, usage, income, or cost creates a very different answer.
| Scenario | Change one assumption | What the comparison shows |
|---|---|---|
| Base case | Use the best current evidence. | Shows the result you would expect if nothing important changes. |
| Conservative case | Use lower income, higher cost, slower growth, or less favourable timing. | Shows whether the decision still works with less optimistic assumptions. |
| Improved case | Use the realistic upside, such as lower cost, better rate, higher usage, or stronger evidence. | Shows the potential benefit without treating it as guaranteed. |
Common mistakes and edge cases
Most errors come from using the right formula with the wrong assumption. Dates can be counted differently, rates can change, official thresholds can move, and real bills or contracts often include conditions that a simple calculator cannot infer automatically.
- Gross yield ignores costs.
- Check this point before using the estimate for a payment, claim, purchase, application, employment decision, or health-related decision.
- Tax treatment differs between individuals and companies.
- Check this point before using the estimate for a payment, claim, purchase, application, employment decision, or health-related decision.
- Voids and maintenance can turn a high-yield property negative.
- Check this point before using the estimate for a payment, claim, purchase, application, employment decision, or health-related decision.
- Capital growth is separate from rental yield.
- Check this point before using the estimate for a payment, claim, purchase, application, employment decision, or health-related decision.
Next steps after calculating
Once you have a result, write down the key assumptions and compare them with HMRC property income guidance and lender/landlord compliance guidance. If the number affects a deadline, tax return, benefit claim, employment issue, medical question, finance agreement, or major purchase, use the calculator as preparation for a more formal check.
For lower-stakes use, the next step may simply be comparing two or three scenarios. For higher-stakes use, the next step should be checking the official guidance, speaking to the relevant organisation, or getting qualified advice before acting.
Important edge cases
- Gross yield ignores costs.
- Tax treatment differs between individuals and companies.
- Voids and maintenance can turn a high-yield property negative.
- Capital growth is separate from rental yield.
Limitations
This calculator is for general information only and is not property, tax, mortgage, or investment advice. This is general property information and not tax, mortgage, or investment advice. The calculator is designed to support understanding and planning, but it cannot verify documents, predict future rule changes, or account for every exception. Use it as an estimate and check the official source before acting where the result matters.
- It does not predict capital growth or future rent changes.
- Tax treatment can differ for individuals and limited companies.
- Local licensing and maintenance costs can change the real return.
- Check HMRC property income guidance and lender/landlord compliance guidance for current rules, rates, definitions, and eligibility where relevant.
- Do not rely on a single scenario where income, costs, dates, rates, usage, or health circumstances may change.
- Keep records of the inputs used so that the estimate can be reviewed later.
Frequently asked questions
Is gross yield enough to compare properties?
It is a quick first check, but net yield and cash flow are usually more useful for real decisions.
Should mortgage repayments be included?
For cash flow, include actual mortgage payments. For investment yield, many investors separate interest cost from capital repayment.
Does yield include house price growth?
No. Rental yield measures rental income against value or cash invested, not capital appreciation.
Should I include mortgage capital repayments?
For cash flow, include actual payments. For investment yield, many investors separate financing structure from property operating return.
What yield is good?
It depends on location, risk, costs, finance, tax position, and capital-growth expectations.
Do repairs count in net yield?
A realistic repairs allowance should be included because maintenance is part of owning rental property.
Related calculators
- Mortgage Repayment Calculator
- Mortgage Affordability Calculator
- Stamp Duty Calculator
- Capital Gains Tax Calculator
What is rental yield?
Rental yield measures the annual return on a property investment as a percentage of the property value. Gross yield is calculated before costs; net yield accounts for landlord expenses except mortgage payments. A gross yield of 5-7% is generally considered reasonable for UK buy-to-let, though net yields after costs are usually lower.
What is cash-on-cash return?
Cash-on-cash return measures the annual return on the actual cash invested: your deposit, stamp duty, and purchasing costs. Unlike yield, which measures against the full property value, cash-on-cash return shows the return on the money you actually tied up.
What are the tax implications of buy-to-let?
Rental income is taxable above the personal allowance. Since 2020, individual landlords can no longer deduct full mortgage interest from rental income. Instead, they receive a 20% basic rate tax credit. This can significantly increase the tax bill for higher-rate taxpayers. Capital Gains Tax may also apply when the property is sold.
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