Rental yield calculator
Gross and net rental yield from rent, property value and running costs. Yield is the quick screen landlords use before mortgage costs and tax are taken into account.
How the two yields are built
Gross yield takes a full year of rent and divides it by the property value, before any costs. It is the headline number in listings and quick to compare across areas. Net yield takes the same rent but subtracts the running costs of being a landlord, so it reflects what the property actually generates before finance and tax.
Neither figure includes the mortgage or your tax bill, which is deliberate: yield measures the property, not your personal position. A mortgaged higher-rate landlord will keep far less than the net yield suggests once interest and Section 24 tax are counted, so treat yield as a first screen, not the final return.
Worked example
Rent of £1,100 a month is £13,200 a year. On a £220,000 property that is a gross yield of 6.0%. Take off £2,600 of running costs and the net income is £10,600, a net yield of 4.8%. A cheaper property at the same rent would show a higher yield, which is why yields tend to be stronger in lower-priced regions.
Common questions
What is a good rental yield?
As a rough guide, a gross yield of around 5% to 8% is often seen as reasonable for a UK buy-to-let, though it varies by region and property type. The £220,000 example here gives a gross yield of 6.0% and a net yield of 4.8% after running costs.
What is the difference between gross and net yield?
Gross yield is annual rent divided by the property value, before any costs. Net yield deducts running costs such as letting fees, insurance, maintenance and an allowance for empty periods. Net yield is the more honest figure, though it still excludes mortgage interest and tax.
Does yield include the mortgage or tax?
No. This is a property-level yield, so it leaves out mortgage interest and income tax. Since the Section 24 changes, higher-rate landlords cannot fully deduct mortgage interest, which can turn a healthy-looking yield into a thin real return. Check the buy-to-let and Section 24 tool for that.
Which costs should I include?
Typical running costs are letting agent fees, landlord insurance, repairs and maintenance, service charges or ground rent on a leasehold, and a void allowance for months with no tenant. Leave out the mortgage and tax here, since yield measures the property itself.
Should I use the purchase price or current value?
For a yield on what you paid, use the purchase price. To judge the return on money you could release by selling, use the current market value. The two differ once prices move, so pick the one that matches the question you are asking.