Rental Yield Calculator

Gross rental yield is calculated by dividing the annual rental income by the property purchase price and multiplying by 100. For example, a property bought for £250,000 generating £1,000/month rent gives a gross yield of 4.8%. This simple metric lets you quickly compare properties across different price points and locations.

Net rental yield accounts for costs including mortgage payments, letting agent fees (typically 8-15% of rent), maintenance (budget 10-15% of rent), insurance, ground rent, service charges, void periods (typically 2-4 weeks per year) and landlord income tax. The net figure is always significantly lower than the gross yield.

This calculator produces both gross and net yield figures. Enter the property price, monthly rent and running costs to see your return. It also shows the annual cash flow after all expenses, which is the real measure of whether a rental property covers its costs.

Gross vs Net yield — why the difference matters. Gross rental yield = (annual rent ÷ property value) × 100. A £200k property earning £1,000/month rent = £12,000/year ÷ £200,000 = 6% gross yield. Net yield deducts costs: mortgage interest, management fees (10-15%), maintenance (typically 1% of value/year), insurance, void periods (1-2 months/year), service charges/ground rent. The same property might have only 3-4% NET yield. Always calculate net to assess true return.

What's a 'good' UK rental yield in 2026? National averages vary by region. London 4-5% gross. South East 5-6%. Manchester/Birmingham 6-7%. Liverpool/Newcastle/Sheffield 7-9%. Some properties in deprived areas yield 10%+ but with higher voids and management issues. Top BTL investors target net yield above 5% AND realistic capital growth of 3-5%/year. Total return (yield + growth) should beat alternative investments (~7% from a diversified equity portfolio).

Tax implications crushing yields since 2017. Section 24 of the Finance Act 2017 phased out mortgage interest relief for individual landlords. From April 2020, mortgage interest can no longer be deducted as an expense — only a 20% tax credit applies. For higher-rate landlords, this effectively raised tax on rental profits by up to 20% of the mortgage interest. Many BTL investors now hold properties in limited companies (SPVs) to retain full interest deductibility, paying 25% Corporation Tax instead of 40-45% personal rates.

Beyond yield — total return calculation. True BTL return = annual rental profit + capital growth. £200k property at 4% net yield = £8,000 profit. If it appreciates 4%/year (£8,000 capital gain), total return = £16,000 = 8% on £200k. With 75% LTV (£50k deposit), the geared return = £16k - £4k mortgage interest = £12k on £50k = 24% return on equity. This 'leveraged' return is what makes BTL attractive — but works both ways: -4% house prices = -8% on equity.

Gross vs net rental yield. Gross yield = (annual rent ÷ property value) × 100. Sample: £200,000 property, £1,000/month rent = £12,000/year. Gross yield = 6%. Net yield = (annual rent − annual costs) ÷ property value × 100. Same property with £3,500 costs (insurance, maintenance, mortgage admin, agent fees) = £8,500 net. Net yield = 4.25%. UK average gross yield 2026: 5-7% (regional variation: London 4-5%, Manchester/Liverpool 7-9%, Hull/Sunderland 8-12%). Net usually 50-70% of gross.

UK landlord costs to budget. Letting agent fees: 8-12% rent (fully managed); 4-6% (let-only). Insurance (landlord buildings + contents): £200-£500/year. Gas safety certificate: £80-£120/year. EPC: £45-£120 (valid 10 years). Repairs and maintenance: budget 5-10% of rent. Void periods: typically 1-2 weeks/year between tenants — 2-4% rent loss. Mortgage costs (BTL): typically 5.5-6.5% rate 2026, plus arrangement fees. Section 24 (since 2017): mortgage interest only attracts 20% tax credit, not deduction — severely impacts higher-rate landlord net yield.

Capital growth vs yield — different markets. London/SE/expensive areas: yield 3-5%, capital growth historically 5-7%/year. Manchester/Liverpool/Leeds: yield 6-8%, capital growth 4-6%. North East/Wales/Yorkshire low-cost: yield 8-12%, capital growth 2-4%. Cash flow positive needs yield 7%+ at current mortgage rates. Below 7% yield: relying on capital growth (speculative). Smart landlords: mix high-yield cash-flow properties (north) + capital-growth properties (south/cities) for balanced portfolio.

Section 24 — the landlord tax change. Pre-April 2017: mortgage interest fully deductible from rental income. Post-2020 (phased in 2017-2020): only 20% basic-rate tax credit on mortgage interest. Sample: rental £15,000, mortgage interest £8,000. Pre-2017: taxable profit £7,000 — £1,400 tax at 20%, £2,800 at 40%. Post-2020: taxable profit £15,000 — £3,000 at 20% + £600 at 40% MINUS £1,600 credit = £3,000 at 20% / £2,000 at 40%. 40% taxpayers can pay 40% TAX on income they didn't even receive (in some cases pre-tax loss but tax bill). Limited company purchase avoids Section 24.

Buy-to-let strategy 2026. Higher-yielding northern cities: best cash flow but slower capital growth. Limited company structure (SPV): mandatory for higher-rate landlords with mortgages. Set up Ltd, transfer in/buy new with company. Costs: incorporation £500, accounts £1,500/year. Worth it from 2-3 properties or £30k+ rental income. SDLT 5% additional surcharge (since Oct 2024). Buy-to-let mortgages: typically 75% LTV max, 125-145% rental cover stress test, rate 5.5-6.5%. Letting on Airbnb: higher gross yield BUT requires planning permission in some council areas (London 90-day rule).