Property Yield Calculator

This calculator works out both the gross and net rental yield on a buy-to-let property — the standard measures used to compare income-producing real estate against everything else you could do with the money. Gross yield is the headline number agents quote; net yield is the more honest one, because it strips out the costs that hit your bank account every month.

It matters because yield is the language buy-to-let speaks. Comparing two properties at different price points, in different cities, or with different management arrangements is almost impossible without it. A £180,000 northern terrace at £950 rent and a £450,000 London flat at £1,800 rent look different until you express both as a yield — at which point the comparison becomes immediate.

It's most useful at the appraisal stage, when deciding whether to make an offer; during portfolio reviews; and when stress-testing a property against future rate or cost changes. It's less useful as the only metric in a decision — yield ignores capital growth, leverage, tax position and ease of management, all of which materially change the real return.

A worked example

A £250,000 property let at £1,200/month produces £14,400 gross rent per year — a gross yield of 5.76%. After deducting 10% letting agent fees (£1,440) and £2,400 of annual running costs (insurance, maintenance reserve, gas safety, EICR), the net rent is £10,560 — a net yield of 4.22%. Add even a modest 4-week void period and the net falls below 4%. That gap between the 5.76% on the brochure and the realistic 4% in the bank is exactly why net yield is the figure that matters.

Why this matters

Buy-to-let is no longer the leveraged tax-efficient cash machine it was a decade ago. Section 24 mortgage interest restrictions, additional 5% stamp duty on second properties, tighter EPC requirements and rising borrowing rates have all narrowed the margin. A property that produced a comfortable 6% net yield in 2018 may produce barely 3% today after the same costs — which means new purchases need a much clearer view of the real number before signing.

Common mistakes

• Quoting gross yield from an agent's brochure without subtracting management fees, voids and maintenance.
• Assuming 100% occupancy — most professionally managed lets see 2–4 weeks of voids per year, sometimes more between long tenancies.
• Forgetting EPC-improvement spending — new minimum standards mean some properties need £5,000–£15,000 of insulation, heating or glazing work over the next few years.
• Calculating yield against the price paid years ago rather than the property's current value — yield on current value is what determines whether your capital is still working hard enough.
• Mixing yield and return on investment — yield ignores leverage; ROI accounts for the share of the price funded by the mortgage.

Beyond the numbers

Yield is one input into a more complete picture. The first additional layer is voids — building 8–12% void allowance (roughly a month a year) into the cost base usually gets you closer to the long-run net figure. The second is capital appreciation: a 3.5% net-yielding property in a market growing at 4% a year is doing very different work to a 6% net-yielding property in a flat market. The third is taxation — Section 24 means higher-rate-tax landlords pay tax on rental income before mortgage interest is deducted, which can substantially reduce net-after-tax yield on mortgaged property. The fourth is EPC improvements: rules currently require an E rating for new tenancies, with proposals for a C minimum by the late 2020s, which can mean meaningful capital outlay on older stock. None of these belong in this calculator's headline figure — but they belong in the decision around it. Pair this with the Mortgage Calculator for cash-on-cash returns and the Stamp Duty Calculator for the 5% additional-property surcharge on the way in.

Related tools: Mortgage Calculator · Stamp Duty · Rent vs Buy · Energy Bill