Buy-to-Let Yield Calculator UK
Work out the gross yield, net yield, and return on cash invested for a UK buy-to-let — so you see the real return, not just the headline rental yield.
Rental yield is the number every buy-to-let listing quotes, and the one most likely to mislead you. A property advertised at a 6% gross yield can deliver a net yield closer to 3.75% once letting fees, maintenance, insurance, and void periods are paid — and if it’s mortgaged, the cash return can turn negative. Gross yield ignores every cost of actually being a landlord. This calculator works out all three numbers that matter: the gross yield (rent against price), the net yield (after running costs), and the return on the cash you actually invest (after the mortgage). It’s the difference between a deal that looks good on a portal and one that pays you. To work out the buy-to-let mortgage itself, use the Mortgage Calculator, and for the upfront tax, the Stamp Duty Calculator.
Property and rent
Mortgage and cash invested
Purchase costs
Running costs
Tax estimate
Buy-to-let result
Estimated net yield
Calculating…
Calculating…
Gross yield
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Annual net profit
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Monthly cash flow
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ROI on cash invested
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Mortgage payment
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Loan-to-value
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Buy-to-let yield — quick lookup
The left table shows the monthly rent needed to hit a target gross yield, by property price — useful for screening deals before you dig into the costs. The right shows how the headline gross yield erodes into a real net yield once running costs are paid. Both use typical UK assumptions; the calculator above runs your exact figures.
| Price | 5% | 6% | 7% | 8% |
|---|---|---|---|---|
| £100k | £417 | £500 | £583 | £667 |
| £150k | £625 | £750 | £875 | £1,000 |
| £200k | £833 | £1,000 | £1,167 | £1,333 |
| £250k | £1,042 | £1,250 | £1,458 | £1,667 |
| £300k | £1,250 | £1,500 | £1,750 | £2,000 |
| Line | Amount |
|---|---|
| Annual rent | £12,000 |
| Letting agent (10%) | −£1,200 |
| Maintenance (1%) | −£2,000 |
| Insurance | −£300 |
| Voids (1 mo) | −£1,000 |
| Net income | £7,500 |
| Net yield | 3.75% |
The right table is the whole story in miniature. A property advertised at a tidy 6% gross yield delivers a net yield of just 3.75% once the ordinary, unavoidable costs of letting are paid — letting fees, maintenance, insurance, and the near-certainty of the odd empty month. The headline number lost more than a third of its value before the mortgage was even mentioned. That’s why gross yield is a screening tool, not a decision tool.
How buy-to-let yield works
There isn’t one yield — there are three, each answering a different question, and confusing them is how landlords talk themselves into bad deals. Gross yield measures rent against price. Net yield measures rent against price after running costs. Return on investment (ROI) measures actual profit against the cash you actually put in. The further down that list you go, the closer you get to the truth — and the more deals fall away.
Gross yield — the headline
Gross yield is the number on every listing because it’s the highest and the simplest. It ignores every cost of being a landlord, so it tells you nothing about whether the property makes money — only whether it’s worth a closer look. Use it to screen and compare areas (northern cities often show higher gross yields than the south-east), then throw it away the moment you’re serious about a specific deal.
Net yield — the reality
Net yield strips out the costs that gross yield pretends don’t exist. On a typical £200,000 property at 6% gross, those costs total around £4,500 a year, dragging the net yield down to 3.75%. This is the number that tells you whether the property earns its keep before financing — and it’s where a lot of “great yield” deals quietly fall apart. The single biggest line is usually maintenance, which landlords routinely underestimate until the boiler dies.
ROI — the number that actually matters
If you buy with a mortgage, neither yield captures your real return, because you haven’t invested the whole property price — you’ve invested the deposit and buying costs. Return on investment (cash-on-cash return) measures your annual profit after the mortgage against the cash you actually put in:
This is where leverage cuts both ways. A mortgage lets you control a £200,000 asset with perhaps £67,000 of cash, which can magnify your return if the numbers work — but it also adds an interest cost that can wipe out the net income entirely. At a 5.5% buy-to-let rate, the interest on a £150,000 loan is £8,250 a year, more than the £7,500 net income — turning a positive net yield into a negative cash flow. The yield looked fine; the deal lost money. ROI is the only number that reveals this.
The costs gross yield ignores — and the tax
Beyond running costs and mortgage interest, buy-to-let carries costs that don’t appear in any yield figure: the additional-property stamp duty surcharge on purchase (often tens of thousands), and income tax on rental profit. Crucially, Section 24 rules mean mortgage interest is no longer fully deductible for individual landlords — you get a 20% tax credit instead, which means higher-rate landlords pay tax on income that’s partly been swallowed by interest. This has reshaped buy-to-let economics, and it’s why many landlords now hold property through limited companies. For the rental income tax side, see the Income Tax Calculator.
Four worked examples
Four buy-to-let deals showing how the same headline yield can mean very different real returns depending on costs and financing.
Example 1 — The headline deal
£200k property, £1,000/mo rent, 6% gross yield
Running costs (agent, maintenance, insurance, voids): £4,500
Net income: £7,500 · Net yield: 3.75%
This is the deal as the portal presents it: a clean 6% gross yield that looks comfortably above what you’d earn in savings. But the running costs are real and recurring — letting fees, the maintenance the building demands, insurance, and the empty month between tenants. They take more than a third of the gross, leaving a net yield of 3.75%. Still positive, but a long way from the headline, and we haven’t touched financing yet.
Example 2 — The same deal, mortgaged
£200k property, 25% deposit, 75% BTL mortgage
Annual cash flow: −£750
Cash invested (deposit + SDLT + fees): £67,000 · ROI: −1.1%
The identical property, now bought with a typical buy-to-let mortgage, loses money. The £8,250 of annual mortgage interest exceeds the £7,500 net income, producing negative cash flow of £750 a year — the landlord pays to own it. The cash-on-cash return is minus 1.1%. The deal that showed a 6% gross yield is, once financed at current buy-to-let rates, a loss-maker before any capital growth. This is the trap gross yield sets, and the reason ROI is the only number that counts.
Example 3 — The cash buyer
Same £200k property, bought outright with cash
Cash invested (price + SDLT + fees): £217,000
ROI: 3.5% (positive, but huge cash tied up)
A cash buyer avoids the mortgage interest entirely, so the same property delivers a positive 3.5% cash-on-cash return. But they’ve tied up £217,000 to earn it — money that could sit in other investments. The cash buyer’s deal works where the mortgaged one doesn’t, but at the cost of locking up far more capital for a return that, after tax, may not beat simpler alternatives. The right answer depends on what else you’d do with the cash.
Example 4 — The high-yield northern flat
£100k flat, £667/mo rent, 8% gross yield
Higher running costs ratio + leasehold service charge
Net yield after costs: ~4.5–5% · Mortgaged ROI: positive
Cheaper properties in higher-yield areas — often northern cities — can survive financing where pricey southern ones can’t, because the rent-to-price ratio is high enough to clear the mortgage interest with room to spare. The catch is that low-value flats often carry leasehold service charges and ground rent that eat into the net yield, and management can be more intensive. Higher gross yield gives you a buffer, but always run the net and ROI — an 8% gross can still disappoint after a £2,000 annual service charge.
Gross, net, ROI — the three numbers that matter
Every buy-to-let has three yield figures, and they fall in a predictable order: gross is the highest and most flattering, ROI is the lowest and most honest. Beginner landlords buy on the first; successful ones decide on the third. Here’s what each tells you, and why you can’t stop at the top:
-
1
Gross yield — for screening only
Rent ÷ price. The headline on every listing, useful only to compare areas and filter deals quickly. It ignores every cost, so it always overstates the return.
Treat it as a first filter: a 4% gross yield rarely survives financing, so it’s not worth the spreadsheet. Anything that passes goes to the next number.
-
2
Net yield — the real income
(Rent − running costs) ÷ price. Strips out letting fees, maintenance, insurance, and voids — the costs of actually being a landlord. Typically a third lower than gross.
This is the property’s true earning power before financing. If the net yield is thin, no clever mortgage structure will rescue the deal.
-
3
ROI — the only number that decides
(Net income − mortgage interest) ÷ cash invested. Measures profit against the cash you actually put in. Leverage can amplify it — or push it negative if interest exceeds net income.
This is the figure that tells you whether the deal pays. At current buy-to-let rates, a 6% gross yield can produce a negative ROI — the deal that looked great loses money.
The same £200k deal, three numbers
Watch the return shrink as the costs get real:
The same property is a 6% opportunity, a 3.75% income, a 3.5% cash investment, or a 1.1% annual loss — depending entirely on which number you look at and how you finance it. Nothing about the bricks changed. The landlords who lose money are the ones who stopped reading at 6%; the ones who build portfolios are the ones who ran it all the way to ROI and walked away when it went red.
Why yield isn’t the whole return
Even ROI doesn’t capture everything, because property has a second return: capital growth. A landlord running a small annual loss on cash flow might still profit handsomely if the property rises in value over a decade. This is the buy-to-let bet many landlords actually make — accept thin or negative yield in exchange for hoped-for appreciation and the tenant gradually paying down the mortgage. It can work, but it’s speculation on house prices dressed up as income investing, and it leaves you exposed if prices stall. A deal that only works on capital growth is a different, riskier proposition than one that pays its way on yield.
The honest framing: yield pays you while you hold; capital growth pays you when you sell. A strong deal does both. A weak one relies entirely on the second and hopes the first doesn’t bleed too much in the meantime. Knowing which kind you’re buying is the difference between an investment and a gamble.
Two scenarios that change the return
What if…
Your mortgage rate rose 1%?
What if…
You self-managed instead of using an agent?
Buy-to-let yield — quick lookup
The left table shows the monthly rent needed to hit a target gross yield, by property price — useful for screening deals before you dig into the costs. The right shows how the headline gross yield erodes into a real net yield once running costs are paid. Both use typical UK assumptions; the calculator above runs your exact figures.
| Price | 5% | 6% | 7% | 8% |
|---|---|---|---|---|
| £100k | £417 | £500 | £583 | £667 |
| £150k | £625 | £750 | £875 | £1,000 |
| £200k | £833 | £1,000 | £1,167 | £1,333 |
| £250k | £1,042 | £1,250 | £1,458 | £1,667 |
| £300k | £1,250 | £1,500 | £1,750 | £2,000 |
| Line | Amount |
|---|---|
| Annual rent | £12,000 |
| Letting agent (10%) | −£1,200 |
| Maintenance (1%) | −£2,000 |
| Insurance | −£300 |
| Voids (1 mo) | −£1,000 |
| Net income | £7,500 |
| Net yield | 3.75% |
The right table is the whole story in miniature. A property advertised at a tidy 6% gross yield delivers a net yield of just 3.75% once the ordinary, unavoidable costs of letting are paid — letting fees, maintenance, insurance, and the near-certainty of the odd empty month. The headline number lost more than a third of its value before the mortgage was even mentioned. That’s why gross yield is a screening tool, not a decision tool.
How buy-to-let yield works
There isn’t one yield — there are three, each answering a different question, and confusing them is how landlords talk themselves into bad deals. Gross yield measures rent against price. Net yield measures rent against price after running costs. Return on investment (ROI) measures actual profit against the cash you actually put in. The further down that list you go, the closer you get to the truth — and the more deals fall away.
Gross yield — the headline
Gross yield is the number on every listing because it’s the highest and the simplest. It ignores every cost of being a landlord, so it tells you nothing about whether the property makes money — only whether it’s worth a closer look. Use it to screen and compare areas (northern cities often show higher gross yields than the south-east), then throw it away the moment you’re serious about a specific deal.
Net yield — the reality
Net yield strips out the costs that gross yield pretends don’t exist. On a typical £200,000 property at 6% gross, those costs total around £4,500 a year, dragging the net yield down to 3.75%. This is the number that tells you whether the property earns its keep before financing — and it’s where a lot of “great yield” deals quietly fall apart. The single biggest line is usually maintenance, which landlords routinely underestimate until the boiler dies.
ROI — the number that actually matters
If you buy with a mortgage, neither yield captures your real return, because you haven’t invested the whole property price — you’ve invested the deposit and buying costs. Return on investment (cash-on-cash return) measures your annual profit after the mortgage against the cash you actually put in:
This is where leverage cuts both ways. A mortgage lets you control a £200,000 asset with perhaps £67,000 of cash, which can magnify your return if the numbers work — but it also adds an interest cost that can wipe out the net income entirely. At a 5.5% buy-to-let rate, the interest on a £150,000 loan is £8,250 a year, more than the £7,500 net income — turning a positive net yield into a negative cash flow. The yield looked fine; the deal lost money. ROI is the only number that reveals this.
The costs gross yield ignores — and the tax
Beyond running costs and mortgage interest, buy-to-let carries costs that don’t appear in any yield figure: the additional-property stamp duty surcharge on purchase (often tens of thousands), and income tax on rental profit. Crucially, Section 24 rules mean mortgage interest is no longer fully deductible for individual landlords — you get a 20% tax credit instead, which means higher-rate landlords pay tax on income that’s partly been swallowed by interest. This has reshaped buy-to-let economics, and it’s why many landlords now hold property through limited companies. For the rental income tax side, see the Income Tax Calculator.
Four worked examples
Four buy-to-let deals showing how the same headline yield can mean very different real returns depending on costs and financing.
Example 1 — The headline deal
£200k property, £1,000/mo rent, 6% gross yield
Running costs (agent, maintenance, insurance, voids): £4,500
Net income: £7,500 · Net yield: 3.75%
This is the deal as the portal presents it: a clean 6% gross yield that looks comfortably above what you’d earn in savings. But the running costs are real and recurring — letting fees, the maintenance the building demands, insurance, and the empty month between tenants. They take more than a third of the gross, leaving a net yield of 3.75%. Still positive, but a long way from the headline, and we haven’t touched financing yet.
Example 2 — The same deal, mortgaged
£200k property, 25% deposit, 75% BTL mortgage
Annual cash flow: −£750
Cash invested (deposit + SDLT + fees): £67,000 · ROI: −1.1%
The identical property, now bought with a typical buy-to-let mortgage, loses money. The £8,250 of annual mortgage interest exceeds the £7,500 net income, producing negative cash flow of £750 a year — the landlord pays to own it. The cash-on-cash return is minus 1.1%. The deal that showed a 6% gross yield is, once financed at current buy-to-let rates, a loss-maker before any capital growth. This is the trap gross yield sets, and the reason ROI is the only number that counts.
Example 3 — The cash buyer
Same £200k property, bought outright with cash
Cash invested (price + SDLT + fees): £217,000
ROI: 3.5% (positive, but huge cash tied up)
A cash buyer avoids the mortgage interest entirely, so the same property delivers a positive 3.5% cash-on-cash return. But they’ve tied up £217,000 to earn it — money that could sit in other investments. The cash buyer’s deal works where the mortgaged one doesn’t, but at the cost of locking up far more capital for a return that, after tax, may not beat simpler alternatives. The right answer depends on what else you’d do with the cash.
Example 4 — The high-yield northern flat
£100k flat, £667/mo rent, 8% gross yield
Higher running costs ratio + leasehold service charge
Net yield after costs: ~4.5–5% · Mortgaged ROI: positive
Cheaper properties in higher-yield areas — often northern cities — can survive financing where pricey southern ones can’t, because the rent-to-price ratio is high enough to clear the mortgage interest with room to spare. The catch is that low-value flats often carry leasehold service charges and ground rent that eat into the net yield, and management can be more intensive. Higher gross yield gives you a buffer, but always run the net and ROI — an 8% gross can still disappoint after a £2,000 annual service charge.
Gross, net, ROI — the three numbers that matter
Every buy-to-let has three yield figures, and they fall in a predictable order: gross is the highest and most flattering, ROI is the lowest and most honest. Beginner landlords buy on the first; successful ones decide on the third. Here’s what each tells you, and why you can’t stop at the top:
-
1
Gross yield — for screening only
Rent ÷ price. The headline on every listing, useful only to compare areas and filter deals quickly. It ignores every cost, so it always overstates the return.
Treat it as a first filter: a 4% gross yield rarely survives financing, so it’s not worth the spreadsheet. Anything that passes goes to the next number.
-
2
Net yield — the real income
(Rent − running costs) ÷ price. Strips out letting fees, maintenance, insurance, and voids — the costs of actually being a landlord. Typically a third lower than gross.
This is the property’s true earning power before financing. If the net yield is thin, no clever mortgage structure will rescue the deal.
-
3
ROI — the only number that decides
(Net income − mortgage interest) ÷ cash invested. Measures profit against the cash you actually put in. Leverage can amplify it — or push it negative if interest exceeds net income.
This is the figure that tells you whether the deal pays. At current buy-to-let rates, a 6% gross yield can produce a negative ROI — the deal that looked great loses money.
The same £200k deal, three numbers
Watch the return shrink as the costs get real:
The same property is a 6% opportunity, a 3.75% income, a 3.5% cash investment, or a 1.1% annual loss — depending entirely on which number you look at and how you finance it. Nothing about the bricks changed. The landlords who lose money are the ones who stopped reading at 6%; the ones who build portfolios are the ones who ran it all the way to ROI and walked away when it went red.
Why yield isn’t the whole return
Even ROI doesn’t capture everything, because property has a second return: capital growth. A landlord running a small annual loss on cash flow might still profit handsomely if the property rises in value over a decade. This is the buy-to-let bet many landlords actually make — accept thin or negative yield in exchange for hoped-for appreciation and the tenant gradually paying down the mortgage. It can work, but it’s speculation on house prices dressed up as income investing, and it leaves you exposed if prices stall. A deal that only works on capital growth is a different, riskier proposition than one that pays its way on yield.
The honest framing: yield pays you while you hold; capital growth pays you when you sell. A strong deal does both. A weak one relies entirely on the second and hopes the first doesn’t bleed too much in the meantime. Knowing which kind you’re buying is the difference between an investment and a gamble.
Two scenarios that change the return
What if…
Your mortgage rate rose 1%?
What if…
You self-managed instead of using an agent?
Frequently asked questions
What is a good rental yield in the UK?
As a rough guide, a gross yield of 6% or more is often considered a starting point worth investigating, though it varies widely by region — northern cities frequently show higher gross yields than the south-east. But gross yield alone is misleading.
What matters is the net yield (after costs, typically a third lower than gross) and the return on the cash you invest after the mortgage. A 6% gross yield can become a negative return once financing and costs are counted, so “good” depends on the full picture, not the headline.
How do I calculate buy-to-let yield?
There are three figures. Gross yield is annual rent divided by property price, times 100 — £12,000 rent on a £200,000 property is 6%. Net yield subtracts running costs (letting fees, maintenance, insurance, voids) first — often dropping that 6% to around 3.75%.
Return on investment is the most important: net income minus mortgage interest, divided by the cash you actually invested (deposit plus buying costs). This is the only figure that shows whether a mortgaged deal genuinely pays. The calculator above works out all three.
Why is my net yield so much lower than the gross?
Because gross yield ignores every cost of being a landlord. The big ones are letting agent fees (around 10% of rent), maintenance (roughly 1% of property value a year), buildings insurance, and void periods when the property sits empty between tenants.
On a £200,000 property at 6% gross, these total around £4,500 a year, cutting the net yield to 3.75%. That’s before any mortgage. Gross yield is useful for screening deals quickly, but the net yield is the property’s real earning power.
Can a buy-to-let lose money even with a positive yield?
Yes — and this is the trap that catches new landlords. A property can have a healthy net yield but still produce negative cash flow once the mortgage is added. At a 5.5% buy-to-let rate, the interest on a £150,000 loan is £8,250 a year, which can exceed a net income of £7,500 — leaving you paying to own the property.
This is why return on investment matters more than yield. A 6% gross yield deal can show a negative cash-on-cash return once financed at current rates. Always run the numbers all the way through to ROI before buying.
How does Section 24 affect buy-to-let returns?
Section 24 rules, phased in from 2017, stop individual landlords fully deducting mortgage interest from rental income. Instead you get a 20% tax credit on the interest. For basic-rate taxpayers the effect is limited, but higher-rate taxpayers effectively pay tax on income the mortgage has already consumed.
In some cases this produces a tax bill larger than the real profit. It’s the main reason many landlords now hold property through limited companies, which pay corporation tax and can still deduct interest. Model your after-tax return, and consider the Income Tax Calculator for the rental income side.
Is it better to buy a rental property with cash or a mortgage?
It depends on what else you’d do with the cash. A cash buyer avoids mortgage interest, so the same property delivers a positive return where a mortgaged one might not — around 3.5% cash-on-cash in our example, versus negative for the mortgaged version at current rates.
But the cash buyer ties up far more capital — the whole price plus costs — to earn that return. A mortgage uses leverage, controlling a larger asset with less cash, which amplifies returns when the numbers work and losses when they don’t. Cash suits low-yield, capital-growth bets; leverage suits higher-yield deals that clear the interest.
What costs should I budget for as a landlord?
The recurring ones: letting agent fees (~10% of rent), maintenance (~1% of property value a year), buildings insurance, void periods (~1 month a year), and any leasehold service charge or ground rent. Plus periodic costs like safety certificates and licensing in some areas.
Upfront, budget the additional-property stamp duty surcharge (often tens of thousands), legal fees, and a survey. And don’t forget income tax on rental profit. Leaving costs out is the single most common reason a buy-to-let underperforms the spreadsheet that justified it.
Should I hold buy-to-let personally or through a limited company?
It depends mainly on your tax position and how many properties you hold. A limited company avoids the Section 24 interest restriction and pays corporation tax rather than income tax, which often suits higher-rate taxpayers and larger portfolios.
But it adds setup and annual accountancy costs, and company buy-to-let mortgages are usually dearer than personal ones. For a single basic-rate landlord, personal ownership is often simpler and no worse off. This is a decision worth modelling carefully or discussing with an accountant — for impartial general guidance, MoneyHelper is a useful starting point.
Related calculators
A buy-to-let decision touches the mortgage, the upfront tax, and the income tax on rent. These calculators handle each piece.
Methodology & sources
How the maths works
Gross yield is annual rent divided by the property price. Net yield subtracts estimated running costs — letting agent fees (a percentage of rent), maintenance (a percentage of property value), insurance, and an allowance for void periods — from the annual rent before dividing by price. Return on investment, or cash-on-cash return, takes the net income, subtracts annual mortgage interest (interest-only is assumed, as is standard for buy-to-let), and divides by the total cash invested: deposit plus stamp duty plus legal and survey fees.
The calculator shows all three so you can see how the headline gross yield erodes into the real return. Figures are estimates for comparison and depend on the cost assumptions you provide. They do not include income tax on rental profit, which depends on your wider tax position.
Assumptions and conventions used
- Gross yield: annual rent ÷ price × 100
- Net yield: (rent − running costs) ÷ price × 100
- ROI (cash-on-cash): (net income − mortgage interest) ÷ cash invested × 100
- Running costs: letting fees ~10%, maintenance ~1% of value, insurance, voids ~1 month
- Buy-to-let mortgage: interest-only assumed, typically up to 75% LTV
- Cash invested: deposit + stamp duty surcharge + legal/survey fees
- Tax: income tax on rental profit and Section 24 not modelled here
- Rates and costs shown are illustrative, not live market figures