Buy-to-Let Yield Calculator

Buy-to-let yield measures the return on your property investment. Gross yield is the annual rent divided by the property price. Net yield subtracts all running costs including mortgage interest, agent fees, maintenance, insurance and void periods. Return on Investment (ROI) measures the cash return on the actual capital you have invested (your deposit and purchase costs).

Since April 2020, landlords can no longer deduct mortgage interest from rental income. Instead, a 20% tax credit is given on mortgage interest paid. This means higher and additional-rate taxpayer landlords pay significantly more tax than under the old rules. The calculator applies the correct tax credit method.

This calculator produces gross yield, net yield and cash-on-cash ROI. It also factors in capital appreciation scenarios to show total return including equity growth. Enter the property price, rental income, all costs and your tax band to see the full picture.

Gross vs Net yield — why both matter. Gross yield = annual rent / property value × 100. £1,000/month rent on £200k property = 6% gross. Net yield deducts all costs: mortgage interest (often the biggest item), management fees (10-15%), maintenance (1% of property value/year), insurance, void periods, certifications (gas, electrical, EPC, EICR). Same property's net yield might be 3-4%. Always use NET to assess viability — gross yields look better than they are.

Regional yield expectations 2026. London 4-5% gross (capital growth focused). South East 5-6%. Manchester/Birmingham/Leeds 6-8%. Liverpool/Sunderland/Bradford 8-10%+. The yield-growth tradeoff: high-yield areas often have weaker capital growth and more management issues (lower-quality tenants, higher voids). Many investors target NET yield above 5% AND realistic capital growth of 3-5%/year for a total return matching equity markets (~8%).

Section 24 tax impact. Since 2017, individual landlords cannot deduct mortgage interest as an expense — only a 20% tax credit applies. For a higher-rate landlord with £8k rent, £3k mortgage interest: pre-2017 taxable income = £5k → tax £2k (40%). Post-2024: taxable income = £8k → tax £3.2k − £600 (20% credit on £3k interest) = £2.6k. Effective tax up 30% for higher-rate landlords. Limited company SPVs (Corporation Tax 25%) sidestep this — increasingly popular.

Beyond yield — leveraged returns. £200k property at 4% net yield = £8k profit. If it appreciates 4%/year = £8k capital gain. Total return = £16k = 8% on £200k unlevered. With 75% LTV (£50k deposit), £4k of mortgage interest reduces profit to £4k, plus £8k capital growth = £12k on £50k = 24% return on equity. This 'gearing' is what makes BTL attractive — but works both ways: a 4% property price fall = -8% loss on equity.