Rental Yield Calculator UK

Rental yield tells you how much a property earns each year as a percentage of what it cost. Gross yield uses the rent alone; net yield deducts running costs first, so it gives a more honest picture of what the property actually returns. A rental yield calculator simply automates the two formulas so you can compare properties or areas quickly.

This guide sets out both formulas, works through a full example, and explains what counts as a "good" yield in the UK market today.

Use our free rental yield calculator to work out gross and net yield with voids, fees and other costs.

Gross vs net yield

Gross yield is the quick, back-of-envelope number most portfolio spreadsheets and property listings quote. It only needs the annual rent and the property value:

Gross yield = (annual rent / property value) x 100

It is useful for a first comparison between properties, but it ignores every cost of actually running the property, so it will always overstate the real return.

Net yield deducts the costs of owning and letting the property before dividing by the value:

Net yield = ((annual rent - annual costs) / property value) x 100

Annual costs typically include:

• Mortgage interest (if you want net yield before finance costs, leave this out and use net yield as an operating measure instead)
• Letting agent or management fees
• Insurance
• Maintenance and repairs
• Void periods (weeks the property sits empty between tenancies)
• Ground rent and service charge, for leasehold flats
• Gas safety, EICR and other compliance costs

Net yield is the number that matters most when deciding whether a property is actually worth buying, because two properties with the same rent can have very different running costs, particularly leasehold flats with high service charges versus a freehold terrace.

There is also a third measure worth knowing: net yield after finance costs, sometimes called cash-on-cash return. This deducts mortgage interest as well as running costs, then divides by the cash you actually put in (your deposit and buying costs) rather than the full property value. It answers a different question: not "how well does the property perform" but "how well is my invested cash performing". A highly geared purchase can show a strong cash-on-cash return even with a modest net yield, because you have put in a small amount of your own money relative to the asset. It cuts both ways, though - gearing amplifies losses as well as gains if rates rise or the property is empty for longer than expected.

Formula

To calculate either yield by hand:

1. Work out the annual rent: monthly rent x 12. Use the achievable market rent, not a hopeful figure.
2. Work out annual costs if calculating net yield: add up every recurring cost listed above for a full year, including an allowance for void periods (a common assumption is two to four weeks empty per year, but check local demand).
3. Divide by the property value - use the purchase price if you are assessing a prospective buy, or current market value if you are reviewing an existing property.
4. Multiply by 100 to get a percentage.

If you are comparing yield against the mortgage cost specifically, rather than against total running costs, that is a different calculation: the interest coverage ratio. See our guide on the interest coverage ratio for buy-to-let if that is what you are actually trying to check.

Worked example

A two-bedroom terrace in the North West, bought for £160,000, lets for £850 a month.

Gross yield

Net yield

Notice the gap between the two figures: 6.4% gross against 4.8% net. That 1.6 percentage point difference is the true cost of running the property, before you even factor in mortgage interest. Our buy-to-let costs checklist has a fuller list of one-off and recurring costs to build into your own figures.

Adding mortgage interest

If the same property was bought with a 75% LTV interest-only mortgage of £120,000 at a 4.9% pay rate, annual interest would be £5,880. Deducting this from the net operating income gives:

This is a useful sense check before you buy: a property can show a respectable net yield on paper but a thin cash-on-cash return once real financing costs and a realistic deposit are factored in, especially if the pay rate rises at the next fixed-rate renewal.

Comparing a second property

A one-bedroom flat in a commuter town, bought for £210,000, lets for £950 a month but carries a £1,400 annual service charge.

Gross yield: (£11,400 / £210,000) x 100 = 5.4% Estimated annual costs (agent fee, insurance, maintenance, compliance, void allowance, service charge): roughly £3,650 Net yield: ((£11,400 - £3,650) / £210,000) x 100 = 3.7%

Compared with the terrace above (4.8% net), the flat looks weaker on yield despite a higher rent in cash terms, mainly because of the service charge. This is exactly the kind of comparison a yield calculator is built for: it strips out the headline rent figure and shows which property actually performs better once costs are accounted for.

What is a good yield?

There is no single "good" yield, because yield and capital growth tend to trade off against each other by region. Broadly:

• Higher-yielding areas (parts of the North East, North West and Midlands) often see gross yields of 7% or more, with lower purchase prices but typically slower capital growth.
• Lower-yielding areas (much of London and the South East) often see gross yields of 3% to 5%, with higher purchase prices and historically stronger capital growth over the long term.
• A workable middle ground for many portfolio landlords sits around 5% to 7% gross, but this varies enormously by property type, area and whether you are geared with a mortgage.

As a rough guide to how this splits by property type, flats in city centres with high service charges tend to sit at the lower end of the range, while HMOs and multi-let houses (renting by the room rather than as a single tenancy) can push gross yields into double figures, reflecting the extra management involved and the additional licensing and safety requirements that come with letting to multiple households under one roof.

Yield alone does not tell you if a property is a good investment. A high-yielding property in a declining area with long void periods can underperform a lower-yielding property in a strong rental market with reliable tenants. Always look at yield alongside void risk, area demand and your own interest coverage ratio if you are financing the purchase, and read our guide on what counts as a good rental yield in the UK for a regional breakdown.

Track portfolio yields in Property HQ

Calculating yield for one property by hand is straightforward. Doing it consistently across ten or twenty properties, with rent reviews, changing costs and void periods all moving at once, is where most landlords fall behind. Property HQ pulls together the rent, costs and voids for each property from your connected bank feeds, so you can see gross and net yield per property and across your whole portfolio without rebuilding a spreadsheet every quarter.

Disclaimer

This guide is general information for UK landlords, not investment advice. Property values, rents and yields vary by area and change over time - do your own local research before buying.