How the rental yield calculator works
Rental yield is the rent a property brings in each year as a percentage of what it is worth. It is the quickest way to compare one buy-to-let against another, or against the interest you could get from savings. The calculator works out two versions.
Net yield = (rent collected − letting fees − running costs) ÷ property value × 100
Gross yield ignores costs, so it flatters every property. Net yield is the more honest figure because it takes off the rent you lose when the property sits empty, the letting agent's cut and the bills you pay as the landlord. Neither yield includes the mortgage, which is why the calculator also shows your monthly cash flow: what is left in your pocket after the mortgage payment, before tax.
Worked example: £200,000 flat let at £1,000 a month
- Rent if let all year: £1,000 × 12 = £12,000, so the gross yield is 6%
- Two empty weeks: £12,000 × 2 ÷ 52 = £462 lost, leaving £11,538 collected
- Letting agent at 12% of rent collected: £1,385
- Insurance, repairs and certificates: £1,500
- Income before the mortgage: £8,654, so the net yield is 4.33%
- Mortgage of £625 a month (£7,500 a year) leaves £1,154 a year, or £96 a month
A 6% headline yield turns into under £100 a month of real cash once everything is paid, and that is before income tax. This is why landlords look at net yield and cash flow rather than the gross figure an estate agent quotes.
What is a good rental yield in the UK?
There is no single target, because yields depend heavily on where you buy. Expensive areas such as London and the South East tend to have low yields because prices are high compared with rents, while cheaper northern towns often show higher yields but slower price growth. As a rough guide when comparing properties:
| Gross yield | What it usually means |
|---|---|
| Under 4% | Rent may not cover a mortgage at today's rates without a large deposit |
| 4% to 6% | Typical for many family homes and flats |
| 6% to 8% | Strong, often in lower-priced areas |
| Over 8% | Usually HMOs or areas with weaker demand, so check void risk carefully |
Costs to include in net yield
- Letting agent fees. Full management commonly costs around 10% to 15% of the rent plus VAT, so 12% to 18% once VAT is added. Tenant-find only is cheaper but you handle repairs yourself.
- Empty weeks (voids). Allow for at least two to four weeks a year between tenants.
- Running costs. Landlord insurance, the annual gas safety check, electrical safety report every five years, repairs, and any service charge or ground rent on a leasehold flat.
Tax on rental income
Your cash flow is taxed as income. For 2026/27, individual landlords cannot deduct mortgage interest from their rent (the rule known as Section 24). Instead you get a tax credit worth 20% of the interest. A higher-rate taxpayer therefore pays 40% tax on profit but only gets 20% back on the interest, which can wipe out a thin margin. The government has also confirmed that from 6 April 2027 property income in England and Northern Ireland will have its own rates of 22%, 42% and 47%, with the interest credit rising to 22%.
Tips for comparing buy-to-let properties
- Work out the yield on the full purchase cost, including stamp duty at the higher rates for additional homes, to see your true return.
- Check the rent will pass a lender's stress test with the buy-to-let mortgage calculator.
- Re-run the numbers with the mortgage rate 2% higher. If the cash flow turns negative, the deal is fragile.
Frequently asked questions
How do you calculate rental yield?
Divide the yearly rent by the property value and multiply by 100. A £200,000 property let for £1,000 a month earns £12,000 a year, which is a gross yield of 6%.
What is the difference between gross and net rental yield?
Gross yield uses the full rent. Net yield takes off empty weeks, letting agent fees and running costs first, so it is always lower. In the example above the 6% gross yield falls to 4.33% net.
What is a good rental yield in the UK?
Many landlords look for a gross yield of 5% to 7%, but the right figure depends on the area and on house price growth. What matters most is that the net income comfortably covers the mortgage with room for rate rises.
Is the mortgage included in rental yield?
No. Yield measures the property's income against its value, so it is the same whether you have a mortgage or not. The calculator shows the effect of the mortgage separately as monthly cash flow.
Can I deduct mortgage interest from rental income?
Not for individual landlords. You get a tax credit of 20% of your mortgage interest in 2026/27 instead, rising to 22% from April 2027. Limited companies can still deduct interest as a business cost.
Last reviewed October 2026 using 2026/27 figures. This calculator gives an estimate for guidance only.