Rental Yield Calculator

Quick answer

Gross rental yield = annual rent ÷ property price × 100. A £200,000 property renting at £1,000 a month yields 12,000 ÷ 200,000 = 6.0% gross. Most UK landlords target 5 to 8% gross; below 4.5% the sums rarely survive costs and tax.

Work out your yield above

Pop your figures into the calculator at the top of the page and it returns gross and net yield instantly. The sections below show exactly how those numbers are reached, with worked examples you can copy, plus the costs and tax that quietly shrink your real return.

How rental yield is calculated

Rental yield expresses your annual rent as a percentage of what the property is worth. There are two versions, and the gap between them is where most beginner mistakes hide.

Gross yield ignores costs. The formula is simple:

Gross yield = (annual rent ÷ property value) × 100

So a property worth £200,000 let at £1,000 a month produces £12,000 a year. That is (12,000 ÷ 200,000) × 100 = 6% gross yield. This gross yield calculator figure is useful for a quick screen, but it overstates what you keep.

Net yield strips out the running costs before doing the sum:

Net yield = ((annual rent − annual costs) ÷ property value) × 100

The costs you should include are letting agent fees, landlord insurance, ground rent and service charges on a leasehold flat, maintenance and repairs, void periods when the property sits empty, gas safety and electrical checks, and any membership or licensing fees. Note that net yield as commonly defined does not deduct your mortgage interest or income tax. If you want the figure after finance and tax, that is your cash-on-cash return or post-tax profit, which is a different calculation covered below.

Use the value you actually paid when you are judging a purchase. Once you have owned the property a few years, switch to the current market value, because yield measured against today's price tells you whether your money is still working hard where it sits or whether selling and redeploying would do better.

Worked example: a £180,000 terraced house

Priya is buying a two-bed terrace in a northern town for £180,000 and expects £875 a month in rent. Her annual rent is £875 × 12 = £10,500.

Gross yield: (10,500 ÷ 180,000) × 100 = 5.83%.

Now the costs. She budgets letting agent fees at 10% of rent (£1,050), insurance £220, repairs and maintenance £600, a gas safety certificate and minor compliance £120, and one month's void allowance (£875). Total annual costs = £2,865.

Net rent = £10,500 − £2,865 = £7,635.

Net yield: (7,635 ÷ 180,000) × 100 = 4.24%.

The headline 5.83% drops to 4.24% once real costs bite. That 1.6-point gap is the difference between a property that looks fine on paper and one that pays you properly.

Worked example: comparing two flats

Yield earns its keep when you are choosing between options. Say you are weighing a city flat at £250,000 renting for £1,150 a month against a market-town flat at £145,000 renting for £750 a month.

• City flat: annual rent £13,800. Gross yield = (13,800 ÷ 250,000) × 100 = 5.52%.
• Town flat: annual rent £9,000. Gross yield = (9,000 ÷ 145,000) × 100 = 6.21%.

The cheaper flat wins on yield even though it earns less rent in pounds, because you tie up far less capital to get it. That is the whole point of the percentage: it normalises return per pound invested. The city flat might still win overall if you expect stronger capital growth, but on income alone the town flat is ahead. Run both through a buy-to-let profit calculator to layer in mortgage costs and see which leaves more in your pocket each month.

What yield leaves out: tax and finance

Yield measures income against price. It says nothing about your mortgage or your tax bill, and both can be substantial. Since the phasing in of Section 24, individual landlords can no longer deduct mortgage interest as a normal expense; instead you get a 20% tax credit on the interest. For a higher-rate taxpayer that change alone can turn an apparently healthy yield into a thin real return.

Rental profit is taxed as income at your usual rates. For 2026/27 in England, Wales and Northern Ireland that is 20% basic, 40% higher and 45% additional rate, with the higher rate starting once total income passes £50,270. Scotland sets its own bands and rates, so a Scottish landlord on the same profit can pay a different amount. Work your actual bill out with the rental income tax calculator, and if you borrow to buy, the buy-to-let mortgage calculator shows how interest-only versus repayment changes your monthly cash flow.

HMRC's own guidance on what you can and cannot claim against rental income is worth reading before your first Self Assessment return.

The buy-to-let purchase tax you must not forget

Yield is calculated on the purchase price, but the price is not all you pay on day one. Buying an additional property triggers a surcharge on top of the normal land tax, and the rules differ by nation:

• England & Northern Ireland (SDLT): a 5% surcharge on every band when you buy an additional dwelling priced £40,000 or more.
• Scotland (LBTT): the Additional Dwelling Supplement is 8% of the whole purchase price, not band by band.
• Wales (LTT): separate higher residential rates apply to additional properties, starting at 5% from the first pound.

That upfront tax does not appear in a yield figure, but it raises your true cost of entry and lengthens the time before you are genuinely in profit. Estimate it with the second-home stamp duty calculator or the main stamp duty calculator before you commit.

How to improve a weak yield

• Negotiate the price, not just the rent. Yield is rent divided by price, so a lower purchase price lifts the percentage immediately and permanently.
• Cut voids. An empty month is roughly 8% of your annual rent gone. Reliable tenants and quick re-letting protect net yield more than a small rent rise.
• Review costs yearly. Insurance and agent fees creep up. Re-quoting can recover a noticeable slice of net rent.
• Consider the room-letting route. If you live in the property and let a room, the Rent a Room scheme can shelter a chunk of that income tax-free, which a standard let cannot.
• Think about exit too. When you eventually sell, gains are taxed; model it with the capital gains tax on property calculator so the final return does not surprise you.

Common mistakes when calculating rental yield

• Quoting gross as if it were net. The advertised 7% on a listing is almost always gross. Always run your own net figure.
• Forgetting voids and repairs. Costs are not zero just because nothing has broken yet. Budget for both even in a good year.
• Using the wrong value. Measure against price paid to judge a purchase, and against current value to judge whether to hold. Mixing the two gives a misleading number.
• Ignoring leasehold charges. Ground rent and service charges on a flat can swallow 1 to 2 points of yield. They belong in your costs.
• Treating yield as profit. A 6% net yield with a 5% mortgage rate may leave very little after finance and tax. Yield is a comparison tool, not a take-home figure.

These estimates are for guidance only and are not personal tax or financial advice. For decisions about a specific purchase, speak to a qualified accountant or independent mortgage adviser, and see the impartial guidance on buy-to-let at MoneyHelper.

Related property calculators

Build the full picture with the buy-to-let mortgage calculator for your finance costs, the rental income tax calculator for your annual bill, and the landlord rental income organiser to keep your figures Self Assessment ready.

Gross yield on a £200,000 property

Complete the picture with the buy-to-let profit calculator, Section 24 tax impact and rental income tax. Landlord obligations: GOV.UK renting out property.