Rental Yield Calculator

Calculate the gross and net rental yield on a buy-to-let property. Includes management fees, mortgage interest, void periods, insurance and maintenance to show true profitability.

Last updated: April 2026

Property details
Purchase costs
BTL surcharge applies: 3% extra in England/Wales, 6% in Scotland.
Annual running costs
Fully managed: 10–15%. Tenant-find only: 5–8%. Self-managed: 0%.
Rental yield summary
Net rental yield
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Gross yield -
Annual gross rent -
Annual total costs -
Annual net profit -
Total invested (all-in) -
Return on investment -

Gross yield versus net yield

Gross rental yield is the simplest measure: annual rent divided by the property purchase price, expressed as a percentage. It is useful for quick comparisons between properties but ignores all costs. Net yield accounts for void periods, management fees, maintenance, insurance, and mortgage interest - it shows the actual return on your investment. The gap between gross and net yield is typically 2–4 percentage points, so a property advertised at 7% gross may deliver only 3–5% net.

What is a good rental yield in the UK?

UK rental yields vary enormously by location. London typically offers gross yields of 3–5% due to high property prices relative to rents. Northern cities - Manchester, Liverpool, Leeds, Sheffield - often offer 6–9% gross yields. The highest yields are often found in areas with lower property prices and strong rental demand from students or young professionals. A net yield above 5% is generally considered good; above 7% is strong. Always check whether high yields reflect genuine demand or an area with higher void and management risk.

Mortgage interest tax relief changes

From April 2020, landlords in England, Wales and Northern Ireland can no longer deduct mortgage interest as a direct expense against rental income. Instead, they receive a basic rate (20%) tax credit on mortgage interest payments. This change has significantly reduced the after-tax profitability of leveraged buy-to-let for higher and additional rate taxpayers. Many landlords have responded by moving properties into limited companies, where full mortgage interest deductibility is retained. This is a complex decision with significant tax and legal implications - professional advice is strongly recommended.

Frequently asked questions

In England and Wales, purchases of additional residential properties (second homes and buy-to-let) attract a 3% surcharge on top of standard SDLT rates from April 2016, raised to 5% from October 2024. In Scotland, the surcharge is 6% on top of LBTT rates. This significantly increases the upfront cost of BTL investment and should be factored into yield calculations from day one. Use the Stamp Duty calculator on ClearCost to calculate the exact amount for your purchase.
Operating a BTL portfolio through a limited company offers the main advantage of being able to deduct mortgage interest in full (not subject to the Section 24 restriction that applies to individual landlords). Corporation Tax at 19–25% is also lower than higher rate income tax for some landlords. However, extracting profits from a company is subject to further dividend tax, and there are higher administrative costs. The decision depends heavily on your personal tax position, the number of properties, and your long-term plans for the portfolio. A specialist property accountant is essential.
Void periods - weeks or months when the property is empty between tenancies - directly reduce gross rental income. Two weeks of void per year reduces effective annual rent by approximately 3.8%. Longer voids (which are more common in premium properties or slower-letting areas) can significantly erode yield. Building a contingency for voids into your yield calculation - typically 2–6 weeks per year depending on location and property type - gives a more realistic picture of actual returns.

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