Rental Yield Calculator UK: How to Calculate Buy-to-Let Returns in 2025/26

Rental yield is the single most important number for evaluating a buy-to-let investment. It tells you what percentage return you are earning on the property value from rent alone, before and after costs. A property that looks attractive on purchase price can be a poor investment once void periods, maintenance, insurance, and tax are factored in. Calculating yield accurately before you buy prevents costly mistakes.

This guide explains how to calculate gross and net rental yield on UK property, what costs to include, what counts as a good yield in 2025/26, and provides worked examples at common price points. Use our rental yield calculator to model gross and net yields instantly for any UK property.

Gross rental yield: the basic formula

Gross rental yield is the simplest measure of return. It is annual rent divided by property value, expressed as a percentage. The formula is: (annual rent divided by property price) multiplied by 100. It ignores all costs, void periods, and tax, which makes it useful for quick comparisons between properties but misleading as a sole measure of investment quality.

If a property costs £200,000 and rents for £900 per month, the annual rent is £10,800. Gross yield is £10,800 divided by £200,000, multiplied by 100, which equals 5.4%. This figure lets you compare properties on a like-for-like basis before drilling into the expense detail that determines your actual return.

For a step-by-step walkthrough of gross versus net yield with regional benchmarks, see our guide on how to calculate rental yield in the UK.

Net rental yield: the figure that matters

Net rental yield accounts for the costs of being a landlord. It is annual rent minus annual costs, divided by property value, expressed as a percentage. The formula is: ((annual rent minus annual costs) divided by property price) multiplied by 100. Net yield is almost always one to three percentage points below gross yield, and the gap varies significantly by region, property type, and whether you self-manage or use an agent.

Using the same £200,000 property renting at £900 per month, assume annual costs of £2,400 for management (10% of rent), £1,200 for maintenance, £400 for landlord insurance, £1,200 for void allowance (one month), and £200 for safety certificates and admin. Total annual costs are £5,400. Net rent is £10,800 minus £5,400, equalling £5,400. Net yield is £5,400 divided by £200,000, multiplied by 100, which equals 2.7%.

Costs to include in your yield calculation

An accurate net yield calculation requires a realistic list of landlord expenses. Omitting costs inflates the yield and leads to poor investment decisions. The following costs should be included in any serious yield calculation for a UK buy-to-let property in 2025/26.

Property management fees

If you use a letting agent, management fees typically range from 8% to 12% of monthly rent for full management, including tenant finding, rent collection, and maintenance coordination. On £900 per month rent, a 10% management fee costs £1,080 per year. Self-managing saves this cost but requires your time for tenant queries, inspections, and compliance.

Maintenance and repairs

Budget 5% to 10% of annual rent for ongoing maintenance. Older properties and flats with service charges at the higher end of this range may need more. Boilers, appliances, plumbing, and decorating all fall to the landlord. A £1,200 annual maintenance allowance on a £10,800 rent is conservative but realistic for a property in fair condition.

Void periods

Allow for periods between tenants when the property earns no rent but costs continue. One month void per year is a standard assumption, equivalent to 8.3% of annual rent. In high-demand areas, voids may be shorter. In slower markets or for higher-priced rentals, allow two months or more. Void allowance on £10,800 annual rent at one month is £900.

Insurance, compliance, and other costs

Landlord insurance typically costs £200 to £500 per year depending on property type and location. Gas safety certificates, electrical inspections, and EPC requirements add £150 to £300 annually. If the property is a leasehold flat, service charges and ground rent must be included. These can range from £1,000 to £4,000 or more per year in some developments and dramatically affect net yield.

Factoring in stamp duty and acquisition costs

For a true picture of return on invested capital, include stamp duty and purchase costs in the denominator. A buy-to-let purchase at £200,000 attracts SDLT of approximately £11,500 including the 5% additional dwelling surcharge. Adding £2,000 for solicitor fees and survey costs, total acquisition cost is £213,500 rather than £200,000.

Recalculating net yield on total invested capital: net rent of £5,400 divided by £213,500, multiplied by 100, equals 2.5%. That is 0.2 percentage points lower than using the purchase price alone. On larger investments the difference is more pronounced. A £400,000 buy-to-let with £30,000 in stamp duty and costs pushes total investment to £432,000, reducing yield by around 0.5 percentage points compared to a calculation on purchase price only.

What is a good rental yield in the UK for 2025/26?

There is no single answer, as acceptable yield depends on your investment strategy, location, and whether you are prioritising income or capital growth. As a general benchmark, gross yields below 4% are weak for a pure income play. Gross yields of 5% to 7% are solid in most UK regions. Above 7% gross may indicate higher risk, a lower-demand area, or a property needing significant work.

Net yields are typically 1.5 to 2.5 percentage points below gross yields depending on costs. A property with a 6% gross yield might deliver 3.5% to 4.5% net. London properties often show lower gross yields of 3% to 4% but may compensate through stronger capital growth over time. Regional properties with higher yields may offer less price appreciation. The right balance depends on your investment horizon and tax position.

Worked example: buy-to-let yield on a £150,000 property

A two-bedroom terrace in the North West is listed at £150,000 with an expected rent of £750 per month (£9,000 per year). Gross yield is 6.0%. Annual costs are: management at 10% (£900), maintenance (£900), insurance (£300), void allowance of one month (£750), and compliance (£200). Total costs are £3,050. Net rent is £5,950. Net yield on purchase price is 4.0%.

Stamp duty on a £150,000 buy-to-let is approximately £8,000 (standard SDLT of £500 plus 5% surcharge of £7,500). With £1,500 in purchase costs, total investment is £159,500. Net yield on total invested capital is £5,950 divided by £159,500, which equals 3.7%. This is a solid income return for the region, though mortgage interest costs would reduce the cash return further if the property is financed.

Worked example: buy-to-let yield on a £300,000 property

A two-bedroom flat in Manchester is priced at £300,000 with rent of £1,300 per month (£15,600 per year). Gross yield is 5.2%. Annual costs include: management at 10% (£1,560), maintenance (£1,200), insurance (£400), service charge and ground rent (£2,400), void allowance (£1,300), and compliance (£250). Total costs are £7,110. Net rent is £8,490. Net yield on purchase price is 2.8%.

Stamp duty on a £300,000 buy-to-let is £20,000 (standard £5,000 plus 5% surcharge of £15,000). With £2,500 in purchase costs, total investment is £322,500. Net yield on total capital is 2.6%. The service charge significantly erodes yield on leasehold flats, which is why many experienced landlords prefer freehold houses for buy-to-let investments.

Mortgage costs and cash-on-cash return

Rental yield measures return on property value, but most buy-to-let investors use a mortgage. Cash-on-cash return measures return on your actual cash invested (deposit plus costs) after mortgage payments. This is often the figure that determines whether an investment is viable month to month.

On the £150,000 property above, an investor putting down a 25% deposit (£37,500) plus £10,000 in stamp duty and costs has £47,500 invested. With a £112,500 mortgage at 5.5% interest-only, annual mortgage cost is £6,188. Net rent after costs is £5,950, so the property runs at a slight monthly loss before tax relief. Section 24 mortgage interest restrictions mean individual landlords cannot deduct mortgage interest from rental income, receiving only a 20% tax credit instead.

Limited company buy-to-let structures allow full deduction of mortgage interest against rental income, which can make higher-yielding properties viable through a company when they would not work in personal ownership. Our buy-to-let investment guide for the UK covers company structures, tax treatment, and financing options in detail.

Gross yield versus net yield versus total return

Gross yield is a quick screening tool. Net yield shows the income return after costs. Total return adds capital growth (or loss) to the income return over your holding period. A property with a 3% net yield that appreciates 4% per year in value delivers a 7% total return. A property with a 6% net yield and flat prices delivers 6% total return. Neither is inherently better; the right choice depends on your goals and tax position.

When comparing buy-to-let to other investments, consider total return over a realistic holding period of five to ten years. Factor in CGT on eventual sale, the cost of being a landlord, and the liquidity disadvantage of property compared to shares or bonds. Rental yield is the income component of that comparison, and calculating it accurately is the foundation of any sound buy-to-let decision.

Common rental yield calculation mistakes

Using current market value instead of purchase price when evaluating a new investment overstates yield if you are paying above the average for the area. Using the asking rent rather than verified market rent inflates the figure. Omitting void periods, service charges, or stamp duty produces an unrealistically high yield that will not match your actual experience as a landlord.

Comparing gross yield on one property with net yield on another is a frequent error that makes poorer investments look better. Always compare like with like. Finally, ignoring mortgage costs when the property is financed gives a misleading picture of cash flow. Yield and cash-on-cash return answer different questions, and you need both before committing to a purchase.

Model any property you are considering in the rental yield calculator. Enter the purchase price, expected rent, and your cost assumptions to see gross and net yield instantly. Adjust the figures to stress-test different scenarios before you make an offer, and compare the result against regional benchmarks to judge whether the investment stacks up.