What this calculator does
This free UK rental yield calculator estimates the gross rental yield on a residential or buy-to-let property. Enter the property value and the expected monthly rent to get an instant gross yield percentage. It is intended for quick comparisons between properties or for an initial check of whether a property meets your target return.
Gross yield is a widely used shorthand metric in property investment — useful for quickly filtering opportunities — but it does not account for costs, voids, tax or financing. For a more complete picture, you also need to estimate net yield and, if using a mortgage, your cash-on-cash return.
How rental yield is calculated
Gross rental yield is the simplest measure:
Net rental yield deducts running costs from annual rent before dividing by property value:
Typical costs to deduct for a net yield calculation include: letting agent fees (8–15% of rent for full management), landlord insurance (approximately £150–£400/year), average maintenance (typically 1% of property value per year is a rough rule of thumb), void period allowance (one to two months per year is realistic for most single lets), and any ground rent or service charge for leasehold properties.
A property with a 7% gross yield might have a net yield of only 4–4.5% once realistic costs are applied. This gap is why gross yield alone can be misleading when comparing properties with very different cost structures.
Example calculation
A £180,000 property renting for £850 per month:
Gross yield
Annual rent: £850 × 12 = £10,200
£10,200 ÷ £180,000 × 100
5.67%
Net yield (estimated)
Agent fees (10%): −£1,020
Insurance + maintenance: −£900
Void allowance (1 month): −£850
Net income: ~£7,430
~4.13%
The difference between gross and net yield in this example is over 1.5 percentage points — a meaningful gap when assessing whether the investment is worthwhile after costs.
When to use this calculator
- Screening potential investments — quickly check whether a property's gross yield meets your minimum threshold before doing deeper due diligence.
- Comparing properties across different price points — a cheaper property is not necessarily a better investment if rental demand is lower.
- Setting a target purchase price — work backwards from a target yield and a known rent to calculate the maximum price you should pay.
- Checking advertised yields — estate agents sometimes quote yields using asking rent rather than achieved rent; verify with local letting agent data.
- Monitoring an existing portfolio — recalculate yield when market rents or property values change to track performance over time.
Common mistakes
Using asking rent instead of market rent
Advertised rents may be higher than what the property achieves once it lets. Use achieved rent data from local letting agents or platforms such as Rightmove and Zoopla to ensure your yield estimate is realistic.
Assuming 100% occupancy
A gross yield assumes 12 months of rent every year. Void periods between tenancies are the norm, not the exception. Even a well-managed property may have one month void per year, which reduces effective annual income by 8.3%.
Using purchase price rather than current market value
If the property was purchased several years ago, the original purchase price overstates the yield on current market value. Use the current estimated value for a fair comparison with other investment options.
Ignoring the impact of Section 24 on net returns
Since 2020, landlords can no longer deduct mortgage interest from rental income before tax. Only a 20% basic rate tax credit is allowed. Higher and additional rate taxpayers are disproportionately affected — a property that looks profitable on gross yield may be loss-making after Section 24 tax.
Frequently asked questions
What is a good rental yield in the UK?
A gross yield of 5–8% is generally considered reasonable. Northern cities (Manchester, Liverpool, Leeds, Glasgow) typically offer 6–9%; London and the South East often 3–5%. What counts as good depends on your investment goals — higher yields provide stronger cash flow, while lower-yield areas may offer stronger capital growth.
What is the difference between gross and net yield?
Gross yield uses total annual rent divided by property value. Net yield deducts running costs (agent fees, insurance, maintenance, voids) before dividing. Net yield is typically 2–3 percentage points lower than gross yield and gives a more accurate picture of actual returns.
How do void periods affect my yield?
One month's void in a year reduces effective annual income by 8.3%. A realistic yield calculation should include a 1–2 month void allowance for single lets. HMOs with multiple tenants spread the void risk across individual rooms, which is one of their yield advantages.
Does rental yield include mortgage costs?
No — yield is calculated before financing costs. To assess profitability after a mortgage, calculate cash-on-cash return: annual profit after all costs including mortgage payments, divided by cash invested (deposit plus buying costs). This measures the actual return on your deployed capital.
Should I prioritise yield or capital growth?
This depends on your objective. High-yield areas provide stronger monthly cash flow. Capital growth areas may deliver better long-term total returns but can be cash-flow negative after mortgage costs. Many investors aim for a balance — sufficient yield to cover costs while benefiting from some appreciation over time.
What yield do BTL mortgage lenders require?
Most buy-to-let lenders require the expected monthly rent to cover 125–145% of the monthly mortgage payment (known as the Interest Coverage Ratio or ICR). At higher ICR thresholds, a property needs a stronger yield relative to the mortgage rate to satisfy lender criteria. This is a separate consideration from investment yield.
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Important information
This calculator is for general information and planning purposes only. It estimates gross rental yield based on the inputs you provide. It does not account for costs, voids, tax, financing, capital growth or any other factor relevant to a complete investment assessment.
Property investment involves risk, including the risk of capital loss, rental voids, unplanned maintenance costs, legislative changes affecting landlords, and changes in the mortgage market. Past performance is not indicative of future results.
This is not investment, financial or tax advice. Before making a property investment decision, consult a qualified financial adviser, tax adviser and solicitor. Read our full Disclaimer.