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.
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. Net yields are typically 2-4% lower. 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% | 4.00% |
| £200,000 | £1,200 | £14,400 | 7.20% | 4.70% |
| £250,000 | £1,200 | £14,400 | 5.76% | 3.26% |
| £300,000 | £1,500 | £18,000 | 6.00% | 3.50% |
| £400,000 | £1,500 | £18,000 | 4.50% | 2.00% |
* Net yield estimates assume 25% cost deduction for maintenance, voids, insurance, and management fees.
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. Your net yield is typically 2-4% lower than gross yield.
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 costs such as management fees, insurance, maintenance, void periods, and ground rent from the rental income before dividing by the total investment cost including 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 surcharge adds £10,000 to your costs, reducing a 6% gross yield to approximately 5.4% when calculated on total investment.
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 4 to 8 weeks per year), ground rent and service charges for leasehold properties, and landlord gas and electrical safety certificates.
Ready to see your numbers?
Use our free calculator to see exactly how much stamp duty you need to budget for.
Work out your stamp duty bill
Emma Richardson, MRICS
Chartered Surveyor & Property Tax Specialist
Emma Richardson is a RICS-qualified Chartered Surveyor with over 12 years of experience in UK property taxation. She founded Stamp Duty Calculator to help buyers understand the complex world of property transaction taxes.