Calculate buy-to-let rental yield
Enter the property value and expected monthly rent to estimate gross rental yield — the standard first metric for assessing a UK buy-to-let investment.
What this calculator does
This free buy-to-let yield calculator estimates the gross rental yield on a UK investment property. Gross yield is the most commonly used initial screening metric for UK landlords — it provides a quick read on the income potential of a property relative to its cost, before detailed due diligence.
Gross yield is a starting point only. A complete investment assessment should also factor in net yield (after costs), cash-on-cash return (after mortgage payments), capital growth expectations, local rental demand, void period risk, and tax position.
How buy-to-let yield is calculated
Gross yield:
Net yield deducts annual costs before dividing:
Typical annual costs to include in a net yield calculation:
- Letting agent management fee: 8–15% of rent
- Landlord buildings and contents insurance: £150–£400/year
- Routine maintenance and repairs: 1% of property value per year is a common rule of thumb
- Void period allowance: 1–2 months per year for a single let
- Gas safety certificate, EICR, EPC and other compliance costs
- Ground rent and service charge (leasehold properties)
Cash-on-cash return takes this further, measuring annual profit after all costs including mortgage payments against the cash you actually invested (deposit plus buying costs). This is the most relevant metric for leveraged buy-to-let investors.
Example calculation
A £200,000 terraced house renting for £950 per month:
Gross yield
£950 × 12 = £11,400/year
£11,400 ÷ £200,000
5.7%
Net yield (est.)
Agent (10%): −£1,140
Maintenance + insurance: −£2,200
Void (1 month): −£950
~3.6%
ICR check (145%)
Required rent: £1,084/month
At 5.5% rate, 75% LTV
(£150,000 mortgage)
⚠ May not pass
This example illustrates an important point: a property with a 5.7% gross yield may still fail a BTL lender's ICR test at 145% if the rent does not adequately cover the mortgage at the lender's stressed rate. Always run the ICR check alongside the yield calculation.
When to use this calculator
- Screening properties — quickly filter potential investments by gross yield before spending time on detailed analysis.
- Working backwards from a target yield — if you require 6% gross yield and know the local rent, calculate the maximum purchase price you should pay.
- Comparing city markets — check whether a higher-priced property in a high-demand area can match the yield of a cheaper property in a higher-yield city.
- Portfolio performance tracking — recalculate yield on existing properties as market rents and property values change over time.
Common mistakes
Ignoring Section 24 when assessing net returns
Section 24 removed full mortgage interest deductibility for individual landlords. Higher rate taxpayers in particular must account for this in their profit calculations — a property that appears profitable before tax may be loss-making or marginally profitable after Section 24 is applied.
Using asking rent instead of market rent
Advertised rents on portals can be aspirational. Use achieved rent data from local letting agents and completed listings to ensure your yield estimate reflects what the property will actually achieve.
Forgetting the stamp duty surcharge
Buy-to-let purchases attract the 5% SDLT surcharge in England, making upfront buying costs significantly higher than for a main residence purchase. A £200,000 BTL purchase costs £11,500 in SDLT vs £1,500 for a standard buyer. This materially affects cash-on-cash return in the early years.
Not checking the ICR before making an offer
If the rent does not cover 125–145% of the mortgage payment at the lender's stressed rate, you may be declined for a BTL mortgage regardless of your deposit or income. Check the ICR before investing time in viewing and due diligence.
Frequently asked questions
How much deposit do I need for a buy-to-let mortgage?
Most lenders require a minimum 25% deposit (75% LTV). Some offer 80% LTV at higher rates. A 25–40% deposit gives access to the most competitive rates and the widest choice of lenders.
What is the ICR and how does it affect what I can borrow?
The Interest Coverage Ratio requires rent to cover the mortgage payment by 125% (basic rate taxpayers) or 145% (higher rate taxpayers) at a stressed interest rate. Low-yield properties may not pass this test even with a large deposit. The ICR is a BTL-specific constraint that does not apply to residential mortgages.
How does Section 24 affect buy-to-let profitability?
Section 24 replaced full mortgage interest deductibility with a 20% basic rate tax credit for individual landlords. Higher rate and additional rate taxpayers are most affected. A property with a gross yield that looked attractive before 2017 may now be far less profitable after tax. Purchasing via a limited company avoids Section 24 but introduces other costs.
Should I buy in my own name or via a limited company?
For higher and additional rate taxpayers with a growing portfolio, a limited company can be more tax-efficient. Section 24 does not apply to companies. However, company mortgages have higher rates and fees, and profit extraction from the company incurs further tax. Consult a specialist landlord tax adviser before deciding.
What is a good gross yield for buy-to-let?
A gross yield of 5–8% is generally reasonable. Northern cities offer 6–9%+; London and the South East 3–5%. What matters more than gross yield is net yield after costs and cash-on-cash return after financing — both require more detailed calculation.
Related calculators
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Related guides
Is buy-to-let worth it in 2025?
Honest analysis of UK BTL returns, costs and tax in 2025
Buy-to-let tax explained UK
Section 24, income tax, CGT and allowable expenses
Buy-to-let for beginners UK
Complete guide for first-time landlords
What is a good rental yield UK?
Regional benchmarks and what investors target
Important information
This calculator is for general information and planning purposes only. Gross yield is an estimate based on the inputs provided and does not account for costs, voids, tax, mortgage financing, capital growth, or any other factor relevant to a complete investment assessment.
Buy-to-let investment involves significant risk including void periods, unplanned maintenance, legislative changes affecting landlord obligations, capital loss, and changes in mortgage availability. Past property returns are not a reliable guide to future performance.
This is not investment, financial or tax advice. Consult a regulated financial adviser and specialist landlord tax adviser before making any investment decision. Read our full Disclaimer.
About the author
✓ Editorially reviewed — all Poqet guides are checked for factual accuracy before publication and updated when UK rates or legislation change. Editorial Policy