CalcBritain

Rental Yield Calculator

Work out the gross and net rental yield on a buy-to-let property from the purchase price, monthly rent, your annual running costs and expected void weeks.

Estimate only. This is an indicative estimate, not financial advice. Actual returns depend on financing, taxation, void periods and property value changes, speak to a mortgage broker or financial adviser before investing.

Enter your property details

Your gross yield, net yield and annual income appear here as you type.

How rental yield is calculated

Gross yield is your annual rent divided by the property price, expressed as a percentage, it's the quickest way to compare properties but ignores every cost of actually owning one. Net yield is more realistic: it takes your annual rent, subtracts your running costs (letting agent or management fees, maintenance and repairs, landlord insurance, and any ground rent or service charge on a leasehold flat), and also deducts an allowance for void weeks, the weeks each year the property sits empty between tenants, before dividing by the property price. Neither figure accounts for mortgage interest, so a highly-geared purchase can have a healthy net yield but a poor actual cash return; for that, use the Buy-to-Let Calculator, which models the mortgage and tax as well.

Gross yield and net yield are different questions

Gross yield is annual rent divided by the purchase price. It is a screening tool: it takes two numbers you can get from any listing, so you can rank twenty properties in an afternoon. What it cannot tell you is whether any of them makes money, because it ignores every cost of ownership.

Net yield subtracts the running costs and an allowance for void periods before dividing by the price. It is the number that reflects whether the property actually earns. The gap between the two is routinely 1 to 1.5 percentage points, which on a marginal deal is the difference between a return and a hobby.

Neither figure accounts for a mortgage. Yield measures the property's performance, not yours. Two investors buying the identical flat, one in cash and one at 75% loan-to-value, see the same yield and completely different cash returns. For the financed picture, including Section 24 interest relief, use the buy-to-let calculator.

Costs landlords forget to include

Letting agent fees are the largest recurring cost for most landlords. Full management typically runs around 10 to 15% of rent plus VAT, with tenant-find-only a one-off fee instead. If you self-manage, count your own time honestly rather than treating it as free.

Maintenance is the line most often understated. A common planning rule is to set aside roughly 1% of the property value a year, or one month's rent, for repairs and replacement of boilers, white goods and flooring. Older properties and HMOs need more.

Then landlord insurance, which is not the same as standard buildings cover; ground rent and service charge on a leasehold flat, which can be substantial and can rise; safety certification such as the annual gas safety check and periodic electrical inspection; and mortgage arrangement fees amortised over the deal period. None of these appear in a gross yield.

Finally, the purchase itself costs more than the price. Stamp duty at the higher rate for additional property, legal fees, survey and any refurbishment all increase what you actually invested. A yield calculated on the price alone flatters a property that needed £15,000 of work.

Void periods are a cost, not bad luck

A property earns nothing between tenancies, and the gap is rarely zero. Budgeting two to four weeks a year is normal; a single month empty removes about 8% of that year's rent, which on a 5% gross yield is most of the margin between a good year and a flat one.

This calculator deducts void loss in proportion to the weeks you specify, so you can see the effect directly. Setting it to zero produces a number that will not survive contact with reality.

Voids are partly controllable. Tenant retention is cheaper than tenant acquisition: a modest below-market rent for a reliable long-term tenant frequently beats chasing the top of the market and re-letting every twelve months, once fees and empty weeks are counted.

What counts as a good rental yield

There is no single threshold, because yield trades off against capital growth. Northern English cities and parts of Scotland and Wales have historically produced higher yields on lower prices, while London and the South East have produced lower yields with stronger capital appreciation. A 4% yield in an area growing steadily can beat an 8% yield somewhere with flat prices and harder-to-place tenants.

The practical test is not an absolute number but whether the net yield clears your cost of capital with room to spare. If you are financing at 5.5% and the net yield is 4.5%, the property is running at a cash loss that only capital growth can rescue, and growth is not contractual.

Compare against alternatives honestly too. Yield on a property is not risk-free and is not liquid: it carries tenant risk, maintenance risk, regulatory risk and months of selling time. It should be expected to pay a premium over cash savings, not merely match them.

Yield is not total return

Yield measures income only. Total return adds capital growth, which for most UK landlords over long holding periods has been the larger component, and subtracts the costs of getting out: agent fees, legal fees and Capital Gains Tax on any gain above the annual exempt amount.

A third measure, return on investment or cash-on-cash return, divides annual net cash flow by the cash you actually put in rather than by the property price. On a geared purchase this is the figure that tells you what your own money earned, and it can be far higher or far lower than the yield depending on the mortgage.

Use all three. Gross yield to shortlist, net yield to judge the property, and ROI after financing and tax to judge the investment.

Worked example: a £200,000 flat letting at £950 a month

A typical leasehold-free two-bed with full management, a realistic maintenance budget and two void weeks a year. These are the exact figures this calculator returns.

Property price£200,000.00
Monthly rent£950.00
Annual rental income£11,400.00
Letting agent / management£1,140.00
Maintenance & repairs£800.00
Landlord insurance£250.00
Annual running costs£2,190.00
Void loss (2 weeks)£438.46
Net annual income£8,771.54
Gross yield5.7%
Net yield4.4%

The headline 5.7% is what a listing would imply. The 4.4% is what the property earns. That 1.3-point gap is entirely ordinary costs, and it is why gross yield should never be the number a purchase decision rests on.

Frequently asked questions

How do you calculate rental yield?
Gross yield is annual rent divided by the property price, multiplied by 100. For net yield, subtract your annual running costs (management, maintenance, landlord insurance, ground rent and service charge) and an allowance for void weeks from the annual rent first, then divide by the price. On a £200,000 flat letting at £950 a month with £2,190 of costs and two void weeks, that is 5.7% gross and 4.4% net.
What is a good rental yield in the UK?
It depends on the trade-off you are making. Higher-yield areas, typically northern English cities and parts of Scotland and Wales, tend to have weaker capital growth, while London and the South East have historically shown the reverse. Rather than chase an absolute figure, check that the net yield comfortably clears your cost of borrowing: financing at 5.5% against a 4.5% net yield is a cash loss that only capital growth can cover.
What is the difference between gross and net rental yield?
Gross yield uses rent and price only, so it is quick to calculate for screening a shortlist but ignores every cost of ownership. Net yield deducts running costs and void periods, so it reflects what the property actually earns. The gap between them is commonly 1 to 1.5 percentage points. Neither includes mortgage interest, which is accounted for separately in a return-on-investment calculation.
Does rental yield include the mortgage?
No. Yield measures the property's income against its price, regardless of how it was funded, which is what makes it useful for comparing properties on equal terms. Two people buying the same flat, one in cash and one at 75% loan-to-value, get the same yield and very different cash returns. To see the financed picture, including Section 24 restrictions on mortgage interest relief, use the buy-to-let calculator.
How many void weeks should I budget for?
Two to four weeks a year is a common planning assumption, though it varies by area, property type and tenant demand. A single empty month removes roughly 8% of the year's rent, which on a mid-single-digit yield is most of the margin. Student and short-tenancy lets typically need a larger allowance than long-term family lets. Setting void weeks to zero produces a number that will not hold up in practice.
Should I use the purchase price or the current value?
Both, for different purposes. Yield on the purchase price plus buying costs tells you how the investment has performed since you made it. Yield on current market value tells you what the capital tied up in the property is earning today, which is the right question when deciding whether to hold, sell or refinance. A property bought cheaply years ago can show a strong historic yield and a poor current one.
What is the difference between yield and ROI?
Yield divides income by the property price. Return on investment, or cash-on-cash return, divides annual net cash flow by the cash you personally put in: deposit, stamp duty, legal fees and any refurbishment. On a mortgaged purchase, ROI can be much higher than the yield because gearing multiplies the return on a smaller stake, and much lower if borrowing costs exceed the net yield.

Also known as: rental yield calculator · rental yield calculator UK · property yield calculator · gross rental yield calculator · net rental yield calculator · buy to let yield calculator

Related calculators