Rental Yield Calculator

What Is Rental Yield?

Rental yield is the annual return on a property investment expressed as a percentage of the property's value. It's one of the most important metrics for buy-to-let investors, helping you compare different properties and assess whether an investment is worthwhile. There are two main types: gross yield and net yield.

Gross vs Net Rental Yield

Gross rental yield is the simplest calculation — it's the annual rental income divided by the property value, expressed as a percentage. For example, a property worth £250,000 generating £1,000 per month in rent has a gross yield of 4.8% (£12,000 ÷ £250,000 × 100).

Net rental yield gives a more realistic picture by subtracting all your costs — management fees, insurance, maintenance, ground rent, service charges, void periods, and mortgage payments — from the annual rental income before dividing by the property value. Net yield is always lower than gross yield and is the figure most experienced investors focus on.

What Is a Good Rental Yield?

In the UK, a gross yield of 5–8% is generally considered good for a buy-to-let investment. However, what counts as "good" varies significantly by location:

• London & South East: 3–5% gross yield is typical, but capital growth tends to be higher
• Northern England & Scotland: 6–10% gross yields are achievable in many areas
• University towns: HMOs (houses in multiple occupation) can achieve higher yields

A net yield above 4% after all expenses is generally considered a solid return. Always factor in potential capital growth alongside rental yield when evaluating an investment.

Costs to Factor In

When calculating your net rental yield, make sure to account for all costs associated with owning a rental property:

• Letting agent / management fees — Typically 8–15% of monthly rent if using a letting agent
• Landlord insurance — Buildings, contents, and liability cover (£150–£400/year)
• Maintenance & repairs — Budget 1–2% of property value per year for upkeep
• Ground rent & service charges — Applicable for leasehold properties
• Void periods — Most landlords budget 2–4 weeks per year for empty periods between tenants
• Mortgage payments — Your monthly mortgage repayment on the property
• Stamp duty — Remember the 5% additional property surcharge for buy-to-let purchases

Use our mortgage calculator to work out your monthly repayments, and our take-home pay calculator to understand how rental income affects your overall finances.