Rental Yield Calculator

Q: What is a good rental yield in the UK?

The UK average gross rental yield is approximately 5-6%, varying significantly by region. Northern cities like Liverpool, Manchester, and Nottingham often achieve 7-8%+ gross yields, while London typically sees 3-4%. A good yield depends on your strategy: income-focused investors target 6%+, while those prioritising capital growth may accept 3-4%.

Q: What is the difference between gross and net rental yield?

Gross yield is annual rent divided by property value, ignoring all costs. Net yield deducts annual running expenses (insurance, maintenance, agent fees, voids, service charges) before dividing by property value. Net yield gives a more realistic picture. Neither includes mortgage costs — for that, use cash-on-cash ROI.

Q: What is the rental coverage ratio and why does it matter?

The rental coverage ratio measures how much the rent exceeds the mortgage payment. Most buy-to-let lenders require annual rent to be at least 125-145% of the annual mortgage payment, stress-tested at a higher rate (typically 5.5%). If your property does not meet this ratio, the lender may refuse the mortgage or require a larger deposit.

Q: What expenses should I include in a rental yield calculation?

Typical annual expenses include: letting agent fees (8-12% of rent), landlord insurance (£150-£400/year), maintenance (10-15% of annual rent), void periods (typically 1 month/year), service charges and ground rent (leasehold), gas safety certificate, EICR, and EPC renewal. Mortgage interest is excluded from yield but included in cash-on-cash ROI.

Calculate gross and net rental yield, full return on investment with SDLT and mortgage costs, or find the rent you need for your target yield. UK 2025/26 rates including 5% additional property surcharge.

Calculate gross and net rental yield on a UK property

Property value

Current market value or purchase price

Monthly rent

Expected or actual monthly rental income

Annual expenses

Total annual running costs (or use breakdown below)

Use expense breakdown?

Calculate expenses from individual components

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How to Use This Calculator

Gross & Net Yield tab

Enter the property value, monthly rent, and annual expenses to see your gross and net rental yield instantly. Toggle "Use expense breakdown" to calculate expenses from individual components: letting agent fee, landlord insurance, maintenance, void periods, service charge, and ground rent. The calculator compares your yield to the UK average of ~5-6%.

Full ROI tab

Go beyond yield to see your true return on cash invested. Enter your deposit, mortgage rate and term, and the calculator works out SDLT (with the 5% additional property surcharge), mortgage payments, and your cash-on-cash ROI. It also checks if your rent meets lender rental coverage requirements (125-145%).

Target Rent tab

Working backwards: enter a property value and your target yield to find the monthly rent you need. Also enter your actual or expected rent to see what yield it gives. The yield table shows returns at different rent levels so you can see how close you are to your target.

Share your result

Every input is encoded in the URL. Click Share to send your exact scenario to a partner, mortgage broker, or save it for later.

The Formula

Rental yield measures the annual return from rental income relative to property value:

Gross Yield = (Annual Rent / Property Value) × 100

Net Yield = ((Annual Rent − Annual Expenses) / Property Value) × 100

Cash-on-Cash ROI = (Annual Profit after Mortgage / Total Cash Invested) × 100

SDLT (additional property) = Standard SDLT bands + 5% surcharge on entire price
Rental Coverage Ratio = (Annual Rent / Annual Mortgage) × 100

Gross yield is the simplest measure — it tells you the raw income return before any costs. Net yield subtracts running expenses but not mortgage costs, making it useful for comparing properties regardless of how they are financed. Cash-on-cash ROI is the most practical measure for leveraged investors, as it shows the return on the actual money you put in.

The 5% SDLT additional property surcharge (increased from 3% in the Autumn Budget 2024) significantly affects buy-to-let economics. On a £250,000 property, the surcharge alone adds £12,500 to your purchase costs.

Example

Sarah — First-time landlord, Leeds

Sarah is buying a £250,000 terraced house in Leeds to rent out. She expects £1,100/month rent and estimates £5,000/year in expenses. She has a 25% deposit and a mortgage at 5% over 25 years.

Gross & Net Yield tab

Property value£250,000

Monthly rent£1,100

Annual rental income£13,200

Annual expenses£5,000

Gross yield5.28%

Net yield3.28%

Annual profit (before mortgage)£8,200

Sarah's gross yield of 5.28% is close to the UK average. Her net yield of 3.28% reflects the true income return after expenses.

Full ROI tab

Deposit (25%)£62,500

SDLT (5% surcharge)£12,500

Legal + survey£2,500

Total cash invested£77,500

Annual mortgage cost~£13,128

Annual profit after mortgage~£72

Cash-on-cash ROI~0.09%

With current mortgage rates, Sarah barely breaks even on cash flow. Her real return will come from capital appreciation and mortgage paydown by her tenants. This is typical for many UK buy-to-let investments in 2025/26.

FAQ

What is a good rental yield in the UK? ▼

The UK average gross rental yield is approximately 5-6%, but this varies significantly by region. Northern cities like Liverpool, Manchester, and Nottingham often achieve 7-8%+ gross yields, while London typically sees 3-4%. A "good" yield depends on your strategy: income-focused investors target higher yields (6%+), while those prioritising capital growth may accept lower yields (3-4%) in areas with stronger price appreciation.

What is the difference between gross and net rental yield? ▼

Gross yield is the simplest calculation: annual rent divided by property value, expressed as a percentage. It ignores all costs. Net yield deducts annual running expenses (insurance, maintenance, agent fees, voids, service charges) before dividing by property value. Net yield gives a more realistic picture of income return. Neither includes mortgage costs — for that, use cash-on-cash ROI in the Full ROI tab.

How much is the Stamp Duty surcharge on buy-to-let properties? ▼

Since the Autumn Budget 2024, the additional property SDLT surcharge is 5% (increased from 3%). This applies to buy-to-let purchases and second homes across all price bands. For example, on a £250,000 property: the standard SDLT would be £0, but with the 5% surcharge you pay £12,500 (5% of £250,000). On a £500,000 property, you would pay approximately £27,500 in SDLT plus surcharge. Source: HMRC, GOV.UK.

What is the rental coverage ratio and why does it matter? ▼

The rental coverage ratio (also called interest coverage ratio or ICR) measures how much the rent exceeds the mortgage payment. Most buy-to-let lenders require the annual rent to be at least 125-145% of the annual mortgage payment, stress-tested at a higher rate (typically 5.5%). For example, if your annual mortgage is £10,000, the lender wants annual rent of at least £12,500 to £14,500. If your property does not meet this ratio, the lender may refuse the mortgage or require a larger deposit.

What expenses should I include in a rental yield calculation? ▼

Typical annual expenses for a UK rental property include: letting agent fees (8-12% of rent for full management), landlord insurance (£150-£400/year), maintenance and repairs (budget 10-15% of annual rent), void periods (typically 1 month/year when the property is empty), service charges and ground rent (leasehold flats), gas safety certificate (~£60-£80/year), EICR (every 5 years, ~£150-£300), and EPC renewal. Mortgage interest is usually excluded from yield calculations but included in cash-on-cash ROI.

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