How to use the Rental Yield Calculator
- 1 Enter the property value or price.
- 2 Enter the monthly rent.
- 3 Enter the expected empty months a year and yearly running costs.
- 4 Enter your mortgage payment and read the yields and cash flow.
Worked example
A £250,000 flat let at £1,300 a month. Yearly rent is £15,600, a gross yield of 6.24%. With one empty month and £2,500 of running costs, the net yield is 4.72%. After a £700 monthly mortgage, the cash flow is about £283 a month before tax.
Features
Gross yield
Yearly rent as a percentage of the property value.
Net yield
After void periods and running costs.
Cash flow
Rent left each month after costs and the mortgage.
Fair comparisons
Compare properties at different prices.
When to use it
Buying a buy-to-let
Check whether a property is worth it.
Area comparison
Compare yields across towns and cities.
Rent reviews
See the effect of a rent increase.
Portfolio review
Find your weakest properties.
Frequently asked questions
How do I calculate rental yield?
Gross yield is the yearly rent divided by the property value, multiplied by 100. A property worth £250,000 with rent of £15,600 a year has a gross yield of 6.24%.
What is net rental yield?
The yield after running costs and empty periods, such as letting agent fees, repairs, insurance, ground rent and service charges. It gives a truer picture of the return.
What is a good rental yield in the UK?
Many investors look for a gross yield of 5% to 8%. Yields are usually higher in the North of England and Scotland and lower in London and the South East.
Does the yield include mortgage costs?
No. Yield is based on the property value. Cash flow shows what is left after the mortgage.
How much should I allow for running costs?
Allow for letting fees of about 10% to 15% of rent for full management, plus repairs, insurance, certificates and service charges.
What void period should I assume?
Many landlords assume two to four weeks a year between tenancies, but it varies by area and property type.
Is rental income taxed?
Yes. Rental profit is taxed as income at your marginal rate, and mortgage interest only gets a 20% tax credit under Section 24.
Should I use purchase price or current value?
Use the purchase price to judge a new purchase and the current value to judge whether to keep or sell an existing property.
What is return on investment?
The cash flow divided by the money you put in, such as the deposit and fees. It is often higher than the yield when you use a mortgage.
Does capital growth count?
Yield ignores changes in property value. Total return adds any growth or fall in value.
Results are estimates based on the official rates linked above. Confirm important figures with the issuing authority or a qualified adviser before you act on them.
Reviewed by ToolsUnlocked Team · Last updated