UK Buy-to-Let Rental Yield Calculator

Rental yield is the starting point for judging whether a buy-to-let property stacks up financially, but a single headline percentage can hide a lot. This calculator works out your gross yield, your net yield after running costs, and your cash-on-cash return once a mortgage is factored in, so you can compare properties on a realistic, like-for-like basis.

How to use the rental yield calculator

Enter the property price and the monthly rent you expect to achieve, then your deposit and mortgage interest rate if you are buying with finance. The calculator assumes a common interest-only buy-to-let mortgage structure. Adjust the management fee, maintenance allowance, expected void weeks per year and any other annual costs, such as landlord insurance or a service charge, to match your own situation. Sensible starting defaults are provided, but every property and letting agent is different, so it is worth using your own figures where you have them.

How the calculation works

Gross yield is the simplest measure: annual rent divided by property price. It ignores costs entirely and is mostly useful for a quick, broad comparison between properties. Net yield is more realistic, starting from rent adjusted for expected void periods, then deducting management fees and a maintenance allowance calculated as a percentage of rent, plus any other annual costs you enter, all divided by the property price.

Cash-on-cash return goes a step further again, deducting the annual interest on your mortgage from net income, then dividing by your actual cash deposit rather than the full property price. This is often the most useful figure for a mortgaged purchase, since it reflects the actual return on the money you have put in, rather than the value of the property as a whole.

Worked example

Take a £220,000 flat let for £1,100 a month, bought with a £55,000 deposit (25%) and an interest-only mortgage at 5.5%. Using typical defaults of a 12% management fee, a 10% maintenance allowance and 2 void weeks a year, plus £600 in other annual costs:

Gross yield is £13,200 ÷ £220,000 = 6%. After voids, effective annual rent is around £12,692. Deducting the £1,523 management fee, £1,269 maintenance allowance and £600 other costs leaves a net annual income of roughly £9,300, giving a net yield of around 4.23%. The £165,000 mortgage at 5.5% interest-only costs £9,075 a year, leaving a net annual cash flow of just £225, or about £19 a month, a cash-on-cash return of roughly 0.41% on the £55,000 deposit put in. This shows how thin the actual cash return can be on a mortgaged purchase, even when the headline gross yield looks reasonable.

Common mistakes to avoid

The most common mistake is quoting or comparing only gross yield, which flatters properties with high running costs or long void periods and says nothing about actual cash flow once a mortgage is in place. Always check the net yield and cash-on-cash return before judging whether a property is a good investment.

Another common mistake is underestimating void periods and maintenance, particularly on older properties or in areas with higher tenant turnover. It is also easy to forget that rental profit is taxable, and that landlords no longer get full tax relief on mortgage interest, only a basic-rate credit, which can significantly reduce the true after-tax return compared with the pre-tax figures shown by a yield calculator.

Finally, remember that buying an additional property in England or Northern Ireland usually attracts a stamp duty surcharge on top of the standard bands, which needs to be budgeted for as an upfront cost rather than an ongoing one.

Related calculators

Use our stamp duty calculator to estimate the upfront tax on a buy-to-let purchase, including the additional property surcharge, and our mortgage calculator if you want to model a repayment rather than interest-only mortgage. Since rental profit is added to your other income for tax purposes, our income tax calculator can help you see the effect on your overall tax bill, and our Capital Gains Tax calculator is useful when you come to plan an eventual sale. For more on the upfront costs of buying, see our guide to how much stamp duty you will pay.