Rental Yield Calculator (UK)
Gross and net yield in three inputs — with the running-cost checklist that separates real yields from brochure yields.
Yield
Net yield here is before tax and mortgage costs — the like-for-like comparison number. Your after-tax position: the rental tax calculator.
Gross tells you the market, net tells you the truth
Gross yield (annual rent ÷ price) is the comparison number agents quote because it is always the biggest. Net yield subtracts real running costs — insurance, agent fees, maintenance, compliance, service charges — and is where deals separate. Two properties at an identical 7% gross can sit at 6% and 4% net once a leasehold service charge and a licensing fee enter the picture.
What to put in running costs (the ones people forget)
- Letting/management fees — typically 8–15% of rent if managed
- Landlord insurance, gas/electrical certificates, EPC renewals
- A realistic maintenance reserve — 5–10% of rent on older stock
- Licence fees where schemes apply — £500–£1,400 per 5 years is common (council-by-council table)
- Voids — even one empty month a year cuts gross yield by over 8%
Neither number is your return on cash — a mortgaged purchase should be judged on cash-on-cash and stress-tested at today’s rates, and your after-tax keep depends on your band and Section 24: run the tax number before falling in love with a yield.
Asked constantly
Market shorthand: 5–6% gross is workable in much of England, 7%+ is strong (usually northern cities and HMOs), under 4% (much of London) is a capital-growth bet wearing a yield costume. The honest test is net yield against your financing cost — a 6% gross that nets 4.5% against a 5% mortgage is losing money before tax.
Gross: annual rent ÷ purchase price × 100. Net: (annual rent − annual running costs) ÷ purchase price × 100. Use price paid including buying costs for honesty; agents use current value because it flatters. The calculator above does both.
No — yield is a property-comparison metric, deliberately pre-tax and pre-mortgage so different buyers can compare the same property. Your personal after-tax return depends on your income band, Section 24 and how the property is held — that's what the rental income tax calculator is for.