Rental Yield Calculator
Calculate the gross and net rental yield on a buy-to-let investment property.
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Last reviewed: 21 July 2026. Figures and rules on this page were checked against the linked official sources on that date. This page is general information, not financial or tax advice.
How rental yield works
Rental yield measures a property's rental income against its price. This calculator uses the standard industry convention: gross yield is the annual rent divided by the purchase price, and net yield deducts your annual running costs and mortgage payments from the rent first. Net yield is the more honest number - two properties with identical gross yields can perform very differently once costs are counted.
Neither figure includes capital growth, tax, or one-off buying costs, and the strong / average / low rating shown with your result is a rule of thumb for quick comparison, not investment advice. Yields vary widely by area and property type - compare local rents and sold prices near you rather than relying on a single benchmark.
The costs that eat into a yield
For a realistic net yield, MoneyHelper's buy-to-let guidance suggests budgeting for costs including:
- Letting agent fees and property maintenance
- Buildings and contents insurance
- Council Tax and bills between tenancies
- Void periods - do not assume the property will always have paying tenants
- Major repair bills, such as a broken boiler or blocked drain
- Mortgage payments - most buy-to-let mortgages are interest-only
Many of these are also allowable expenses against rental income for tax - HMRC's list includes letting agents' fees, insurance, and maintenance and repairs (but not improvements). Sources: MoneyHelper, gov.uk.
Buying costs and rules to factor in
Stamp duty
In England and Northern Ireland, buying a residential property for £40,000 or more that will not be your only one usually attracts the higher SDLT rates - 5% on top of each standard band (gov.uk). Work out the exact figure with our stamp duty calculator.
Tax on the rent
Rental profits are taxed as income (after the £1,000 property allowance and allowable expenses), and mortgage interest relief is restricted to a 20% basic-rate credit. Making Tax Digital for Income Tax already applies to landlords with qualifying income over £50,000, extending to £30,000 from April 2027 and £20,000 from April 2028 (gov.uk).
Tenancy and compliance rules
Since 1 May 2026 the Renters' Rights Act has moved tenancies to periodic terms, ended Section 21 evictions and capped rent rises at once a year - build that into your void and possession assumptions (gov.uk). Energy standards are also rising: the government has confirmed rented homes are expected to meet a higher standard - broadly EPC C under the reformed EPCs - by 1 October 2030, with a cost cap of £10,000 per property, though the regulations are not yet law (gov.uk consultation response). Licensing is set by each local council - always check yours before letting.
Frequently asked questions
How does this calculator work out rental yield?
We use the standard industry convention: gross yield is the annual rent divided by the purchase price, shown as a percentage. Net yield deducts your annual running costs and mortgage payments from the rent first, so it reflects what the property actually returns. Neither figure includes future price growth or tax - they measure rental income against the price you paid.
What is the difference between gross and net yield?
Gross yield ignores costs, so it is only useful for quick comparisons between properties. Net yield subtracts running costs - letting agent fees, maintenance, insurance, mortgage payments - and gives a more honest picture of the return. Two properties with the same gross yield can have very different net yields once costs are counted.
What counts as a good rental yield?
There is no official benchmark - what counts as good varies by area, property type and your costs, and the rating shown by this calculator is a rule of thumb, not advice. For context, at our July 2026 review the ONS was reporting average UK monthly private rent rising 3.3% to £1,383 in the 12 months to May 2026 - the latest ONS Price Index of Private Rents has the current figure. Compare local rents and sold prices rather than chasing a single number.
What costs should I include in the annual expenses box?
MoneyHelper suggests landlords track letting agent fees, property maintenance costs and any Council Tax paid between tenancies, and budget for void periods and major repair bills such as a broken boiler. Buildings and contents insurance, agents' fees and maintenance (but not improvements) are also among the allowable expenses HMRC lists against rental income. See MoneyHelper's buy-to-let guide and gov.uk.
Do I pay extra stamp duty on a buy-to-let?
Usually yes. In England and Northern Ireland, buying a residential property for £40,000 or more that will not be your only one attracts the higher SDLT rates - 5% on top of each standard band, giving 5%, 7%, 10%, 15% and 17%. Scotland and Wales have their own, different rules. See gov.uk's higher-rates guidance, and use our stamp duty calculator for the figure.
How are buy-to-let mortgages different?
Most buy-to-let mortgages are interest-only, so the monthly payment covers only the interest and the loan itself is repaid at the end. Lenders typically ask for a deposit of at least 25% (some offer 80-85% loan-to-value), and expect the rent to cover roughly 125% to 145% of the mortgage payment - tested at a higher assumed interest rate set by the lender. See MoneyHelper.
How is rental income taxed?
Rental income is taxable. The first £1,000 of property income is tax-free (the property allowance); beyond that you pay Income Tax on profits after allowable expenses (gov.uk). Tax relief on mortgage interest is restricted to a 20% basic-rate credit rather than a deduction (HMRC guidance). Since April 2026, landlords with qualifying income over £50,000 must also use Making Tax Digital for Income Tax - the threshold drops to £30,000 from April 2027 and £20,000 from April 2028. Start at gov.uk and speak to an accountant about your own position - property tax rules were also changed at recent Budgets, so check the current position each year.
Do recent law changes affect my assumptions?
Yes - factor them in. Since 1 May 2026 the Renters' Rights Act has replaced fixed-term assured shorthold tenancies with periodic tenancies, ended Section 21 no-fault evictions, and limited rent increases to once a year (gov.uk). The government has also confirmed rented homes are expected to meet a higher energy standard - broadly EPC C under the reformed EPC metrics - by 1 October 2030, with a cost cap of £10,000 per property, though the regulations are not yet law (gov.uk consultation response). And licensing varies: HMOs housing 5 or more people from more than one household need a licence (gov.uk), and councils can require licences more widely - always check your local council's current schemes.
This page is general information, not financial, tax or legal advice. Buy-to-let returns are not guaranteed, rules differ in Scotland and Wales, and your tax position depends on your circumstances - speak to an accountant or adviser before committing.