Kalkulo

Rental yield calculator

Calculate the gross and net yield of a UK buy-to-let from purchase price, rent and operating costs, to compare properties and cities.

Result
Gross yield
5.60%
Net yield
4.80%

About this tool

Why use this tool

Rental yield is the primary metric to assess a buy-to-let investment in the UK. It helps compare properties and cities — a terraced house in Middlesbrough yielding 8 % gross is very different from a flat in central London at 3 %. It also benchmarks buy-to-let against alternatives: FTSE 100 dividend yield around 3 % in 2026, top easy-access cash ISAs around 4.5 % AER, and NS&I Premium Bonds at a 4.35 % prize fund rate from the September 2026 draw — a rate NS&I has changed several times in 2026, so check nsandi.com for the current figure rather than treating it as fixed.

How it works

Gross yield = (annual rent / purchase price) × 100. Net yield subtracts operating costs: mortgage interest (only 20 % tax credit since Section 24), letting agent fees (typically 10–15 % managed), buildings insurance, service charge and ground rent (leasehold), gas safety certificate (£60–£90/yr), EICR every 5 years, EPC every 10 years, void periods (usually 1 month/year) and maintenance reserves. Since 2020 landlords also pay 3 % Stamp Duty surcharge on additional properties.

Real example

Terraced house in Manchester bought for £180,000 (plus £8,400 SDLT surcharge = £188,400 total), rented for £900/month. Annual rent = £10,800. Gross yield = 10,800 / 188,400 × 100 = 5.7 %. After £3,200 in expenses (management £1,300, insurance £250, maintenance £900, certificates £150, void £750), net yield = 7,600 / 188,400 = 4 % — reasonable for the North West.

Practical tips

Target 6 %+ gross outside London to absorb Section 24 and cover leveraged mortgages. Northern cities (Liverpool, Sheffield, Sunderland) often exceed 8 %. Consider incorporation via a limited company to reclaim full mortgage interest — worth it above ~£50k rental income. Register with the property redress scheme and comply with Right to Rent checks. Use ONS PIP data and Zoopla/Rightmove Market Trends. Assess HMO potential (higher yield but more regulation). Check EPC — from 2028, rentals must be C or above (proposal).

Disclaimer

This is an indicative calculation. Actual returns depend on tax status, income band, financing costs and unpredictable events. Your capital is at risk and property values can fall. Seek advice from an FCA-regulated financial adviser and a qualified accountant. This tool is not regulated investment advice.

Frequently asked questions

How did Section 24 change buy-to-let returns?⌄
Since being fully phased in by April 2020, Section 24 replaced full mortgage interest deduction with a flat 20% tax credit on interest paid, regardless of your income tax band. This hits higher-rate (40%) and additional-rate (45%) taxpayers hardest, since they used to get full relief at their marginal rate and now only get 20% back — sometimes pushing a profitable-looking property into an effective loss after tax.
Should I hold a rental property personally or through a limited company?⌄
A limited company can deduct mortgage interest in full against corporation tax, avoiding the Section 24 restriction, which is why incorporation has become popular for larger portfolios. The trade-off is corporation tax on profits, income tax or dividend tax when you extract money from the company, and extra accounting costs — generally worth exploring above roughly £50,000 of annual rental income, less so for a single small property.
How do Stamp Duty and the additional-property surcharge affect my yield calculation?⌄
Since 31 October 2024 the additional-property Stamp Duty surcharge is 5 percentage points on top of the standard SDLT bands, and this cost should go into your purchase price when calculating yield, not be ignored. On a £200,000 buy-to-let, that's an extra £10,000 that reduces your effective yield if you calculate it against price plus SDLT rather than price alone.
Does an HMO always mean a higher yield than a standard let?⌄
Often, yes — a House in Multiple Occupation lets you charge per room rather than for the whole property, which can push gross yield well above a comparable single-let. But HMOs require a licence in most areas, stricter fire and safety standards, more frequent tenant turnover, and more hands-on management, all of which eat into the higher headline yield.
What's the difference between gross yield and total return including price growth?⌄
Gross yield only measures rental income against price. Total return adds capital appreciation on top, which matters because a low-yield London flat has historically leaned on price growth for much of its return, while a higher-yield northern terraced house may deliver more of its return through rental income and less through appreciation.

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