Rental Yield Calculator
Gross Yield
7.20%
Net Yield
1.56%
ROI (Cash on Cash)
5.45%
Monthly Cash Flow
£273
Total Investment
£210,000
Cash Invested
£60,000
✗ Low Yield
Below 3% may not be viable as a rental investment.
Annual Cost Breakdown
Annual Rent (after void)
£13,680
Mortgage Interest
£8,250
Management Fees
£1,440
Maintenance
£720
Does not include income tax, capital gains tax, or property appreciation. Consult a tax advisor for complete analysis.
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Gross yield vs net yield — what's the real difference?
Gross yield is the headline number most listings quote — annual rent divided by property price. It's a quick way to compare properties but ignores every cost of actually running the investment.
Net yield deducts mortgage interest, letting agent fees, maintenance, insurance and void periods from rental income before comparing it to your total investment (property price plus purchase costs). Net yield is the number that actually reflects what you'll take home, and it's often 2-4 percentage points lower than the gross figure — which is why serious investors always calculate both.
Risks that can erode your yield
Interest rate changes
If your buy-to-let mortgage is on a variable rate, or your fixed deal ends, a rate rise directly cuts your net yield since mortgage interest is usually the biggest cost.
Void periods
Every month a property sits empty between tenants is a month with no rent but ongoing mortgage, insurance and maintenance costs — always budget for this.
Section 24 tax changes
Since 2020, landlords can no longer deduct mortgage interest from rental income before calculating tax — instead getting a 20% tax credit, which can push higher-rate taxpayers into a worse position than the headline yield suggests.
Maintenance surprises
Boiler replacements, roof repairs and compliance costs (EPC, gas safety, electrical checks) can eat into yield unexpectedly — a maintenance reserve of 5-10% of rent is a sensible buffer.
How UK rental yields vary by region
Yield and capital growth potential are often inversely related across the UK. London and the South East typically offer lower yields (3-4%) but historically stronger long-term price growth, while parts of the North of England, Scotland and Wales can offer 6-8%+ yields on cheaper properties with more modest capital growth. Neither is objectively "better" — it depends on whether your strategy prioritises monthly cash flow or long-term equity growth. Use our Mortgage Calculator to model financing costs before comparing areas.
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Frequently Asked Questions
What is rental yield?
Rental yield is the annual return on a property investment, calculated as (annual rent ÷ property value) × 100. Gross yield ignores costs; net yield includes them.
What is a good rental yield?
UK average is 4-6%. North of England often 6-8%. London typically 3-4%. Aim for at least 5% gross yield for viable investments.
Gross vs net yield?
Gross yield = (annual rent ÷ property value) × 100. Net yield deducts costs like mortgage interest, management fees, maintenance, insurance, and void periods.
What costs should I include?
Mortgage interest, letting agent fees (10-15%), maintenance (5-10% of rent), insurance, ground rent, service charges, and void periods (5-10% vacancy).
Key Terms Explained
Plain-English definitions of the financial terms used in this calculator.
- Capital Gains Tax (CGT)
- Tax on the profit when you sell an asset — shares, crypto, or a second property — for more than you paid. Everyone has an annual CGT exemption; gains above it are taxed based on your income band.
- Stamp Duty (SDLT)
- A tax paid when buying property in England and Northern Ireland, charged in bands on the portion of the price above each threshold. First-time buyers get relief; second homes pay a surcharge.
- Rental Yield
- A property's annual rental income as a percentage of its purchase price. Gross yield ignores costs; net yield deducts expenses like maintenance, insurance and letting fees — the truer measure of return.
- ROI (Return on Investment)
- Profit from an investment expressed as a percentage of its cost. An investment of £1,000 that grows to £1,150 has a 15% ROI. Always compare ROI after fees and tax.
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Not Financial Advice: This calculator is for informational and educational purposes only. Results are estimates and do not constitute financial advice, recommendations, or regulated advice. We are not authorised or regulated by the Financial Conduct Authority (FCA). Always consult a qualified financial adviser for personalised advice. Tax treatment depends on your individual circumstances and may change. Tax laws and rates may change. Past performance does not guarantee future results.
