Rental Yield Calculator
Calculate gross and net rental yield on your investment property. Factor in all costs including stamp duty, maintenance, and void periods to see your true return on investment.
Buying through a company? The rates are different
Companies pay the 5% surcharge on homes, and a flat 17% above £500,000 unless a relief applies.
Property Details
Annual Expenses
Time between tenants (typically 2-4 weeks)
Mortgage Details (Optional)
Yield Results
Enter Property Details
Input purchase price and monthly rent to calculate yield
Understanding Gross vs Net Yield
Gross vs Net Yield
Gross yield is annual rent ÷ property price. Net yield deducts all costs including maintenance, insurance, void periods, and management fees for a true picture.
What's a Good Yield?
Most buy-to-let investors target 5-8% gross yield. On a 25% cost ratio, net yield is a quarter lower, so 1.25 to 2.0 percentage points below gross. Higher yields often come with higher risk or maintenance requirements.
Impact of Stamp Duty
Stamp duty significantly impacts your total investment cost and therefore your yield calculation. Buy-to-let properties pay an additional 5% surcharge on all bands. Use our stamp duty calculator or BTL calculator to estimate costs. Review our landlord guide for full details.
Example Rental Yields
| Property Value | Monthly Rent | Annual Rent | Gross Yield | Est. Net Yield |
|---|---|---|---|---|
| £150,000 | £800 | £9,600 | 6.40% | 4.80% |
| £200,000 | £1,200 | £14,400 | 7.20% | 5.40% |
| £250,000 | £1,200 | £14,400 | 5.76% | 4.32% |
| £300,000 | £1,500 | £18,000 | 6.00% | 4.50% |
| £400,000 | £1,500 | £18,000 | 4.50% | 3.38% |
* Net yield estimates deduct 25% of the annual rent for maintenance, voids, insurance and management fees, then divide by the property value. Financing costs are not deducted.
Special Considerations
Void Periods
Most landlords experience 2-4 weeks of void periods per year between tenancies. This directly reduces your net yield and should be factored into calculations.
Maintenance Reserves
Budget 10-15% of annual rent for repairs and maintenance. Boilers, appliances, and general wear will need replacement over time, impacting your net returns.
Insurance Costs
Landlord insurance typically costs £200-500 annually and is essential. Contents insurance for furnished lets and rent guarantee insurance add to costs.
Mortgage Interest Impact
Section 24 restricts mortgage interest relief to 20% tax credit. Higher-rate taxpayers should factor this into yield calculations and consider limited company structures.
Important: Gross Yield Isn't Your Real Return
Gross yield doesn't reflect your actual return on investment. Always calculate net yield by deducting all costs including maintenance, insurance, void periods, management fees, and the impact of Section 24 mortgage interest restrictions. On a 25% cost ratio, net yield is a quarter lower than gross, which is 1.25 to 2.0 percentage points at typical gross yields.
Frequently Asked Questions
What is the difference between gross and net rental yield?
Gross yield is the annual rent divided by the property purchase price, expressed as a percentage. Net yield deducts annual running costs such as management fees, insurance, maintenance, void periods and ground rent from the rental income before dividing by the property price. Mortgage interest is a financing cost rather than a running cost, so it belongs in the cash-on-cash return instead. If you want the yield on the money you actually committed, divide by the price plus stamp duty and buying fees.
What is a good rental yield in the UK?
A gross rental yield of 5% to 8% is generally considered good for UK buy-to-let properties. Yields above 8% can indicate higher-risk areas. London typically offers lower yields of 3% to 5% but stronger capital growth. Northern cities like Liverpool and Manchester often offer yields of 6% to 8%.
How does stamp duty affect rental yield?
Stamp duty increases your total acquisition cost, which reduces your yield. The 5% buy-to-let surcharge has a significant impact. For example, on a £200,000 property the 5% surcharge adds £10,000 and the full buy-to-let SDLT bill is £11,500, so a 6% gross yield (£12,000 of rent) becomes 5.67% when measured against the £211,500 actually invested.
Should I focus on yield or capital growth?
This depends on your investment strategy. Yield-focused investors prioritise regular cash flow from rent and tend to buy in higher-yielding areas outside London. Growth-focused investors accept lower yields in exchange for property value appreciation over time. Many investors seek a balance of both.
What costs should I include in net yield calculations?
Include letting agent fees (8% to 15% of rent), buildings and contents insurance, maintenance allowance (10% to 15% of rent), void periods (typically 2 to 4 weeks per year), ground rent and service charges for leasehold properties, and landlord gas and electrical safety certificates.
Reviewed by
Julie White
ACASDLT Expert since 1999Stamp Duty Land Tax Specialist
ACA and Tax Adviser with a career spanning nearly four decades, specialising in SDLT planning and advisory work since 1999.