Gross yield
6.00%
Annual rent ÷ price
Net yield
4.80%
After running costs
Annual rent
£12,000
Monthly rent × 12
Net annual income
£9,600
Before mortgage and tax
How rental yield is calculated
Gross rental yield is the annual rent as a percentage of the property price:
Gross yield = (monthly rent × 12) ÷ property price × 100
Net rental yield takes your running costs off the rent first, so it reflects what the property actually earns:
Net yield = (annual rent − annual costs) ÷ property price × 100
For example, a £200,000 property let at £1,000 a month brings in £12,000 a year, a 6% gross yield. With £2,400 of annual costs, the net yield is 4.8%.
What this calculator leaves out
Yield is a quick screening number, not the full picture of a deal. It does not include:
- Mortgage payments: use the buy-to-let mortgage calculator to see monthly cashflow after finance.
- Buying costs: stamp duty alone can add 5% or more for an additional property. Check it with the stamp duty calculator.
- Income tax on the rent, and capital growth. A lower-yield area may still deliver a better total return if prices rise faster.
Frequently asked questions
What is the difference between gross and net rental yield?
Gross yield is simply annual rent divided by the property price. Net yield deducts your annual running costs (insurance, maintenance, letting agent fees, ground rent and service charges, and an allowance for empty periods) before dividing by the price. Net yield is the more honest number; gross is what most listings and headlines quote.
Should I use the purchase price or the current value?
Use the purchase price (plus buying costs such as stamp duty and legal fees) to judge a deal you are considering. Use the current market value to decide whether a property you already own is still worth holding: that tells you the return your equity is earning today.
Does rental yield include the mortgage?
No. Yield measures the property itself, independent of how it is financed. To see what is left after the mortgage, use our buy-to-let mortgage calculator, which works out monthly payments and cashflow.
How do void periods affect yield?
Every month a property sits empty knocks roughly 8% off that year’s rent. Most landlords budget for two to four weeks of voids a year; add that to your annual costs to get a realistic net yield.
What is a good rental yield in the UK?
As a rough guide, 5–6% gross is solid for a standard buy-to-let and 7% or more is strong. London and the South East often sit at 3–5% because prices are high relative to rents, while many areas of the North, Midlands, Wales and Scotland see 7–9%. HMOs usually show higher gross yields but carry higher costs.
More free tools
Yields are calculated from the figures you enter and do not account for tax. These tools give estimates for research purposes and are not financial, tax or mortgage advice. See our terms.
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