Rental Yield Calculator
Rental Yield Calculator
Enter your monthly rent and the current estimated value of the property to calculate gross rental yield. Add your annual costs to see net yield. All cost fields are optional. Leave out any that do not apply to your property.
How to use this tool
- Enter your monthly rent and the current estimated market value of the property.
- Add your annual costs in the optional fields: management fee, void period allowance, mortgage interest, maintenance, insurance, and any service charge or ground rent.
- Gross yield appears as soon as you enter rent and property value. Net yield updates as you add costs.
Understanding your results
Gross yield shows the return before costs. It is calculated as annual rent divided by property value, expressed as a percentage. Net yield shows what remains after deducting the costs you entered. A property with a gross yield of 6 per cent may have a net yield of 3 to 4 per cent once management fees, maintenance, and void periods are accounted for.
Both yield figures are before personal income tax. Section 24 of the Finance Act 2015 restricts mortgage interest relief for landlords paying income tax above the basic rate. If you pay tax at 40 or 45 per cent, your after-tax return will be lower than the net yield figure shown here. Use the Landlord Income Tax Calculator for a tax-adjusted view.
A void period allowance of 4 to 8 per cent is typical for a property that changes tenant once a year. Maintenance at 1 per cent of property value per year is a widely used rule of thumb for general upkeep. Use the current estimated market value for the most accurate yield comparison. If you want to calculate your return on original investment, use the purchase price instead.
For leasehold properties, include service charge and ground rent in the annual costs section. These can be significant costs and are often omitted from quick yield estimates.
Save this result — create a free account to save your calculation and access it later.
Legal context
Section 24 of the Finance Act 2015 restricts the deductibility of mortgage interest for landlords paying income tax at the higher or additional rate. From April 2020, mortgage interest is no longer an allowable expense against rental income. Instead, a 20 per cent basic rate tax credit applies to the full mortgage interest amount. For a landlord paying income tax at 40 per cent, this means the effective tax cost of mortgage interest is higher than before April 2020. Source: Finance Act 2015, Section 24; HMRC guidance on residential property income.
If you have a repayment mortgage, only the interest portion is an operating cost for yield purposes. The capital repayment portion builds equity and does not reduce rental profit. Your mortgage lender statement will show the interest and capital split. Entering your full repayment amount will give an inaccurate net yield figure.