Rental yield calculator
Work out a property’s gross and net rental yield, the cash flow after the mortgage, and the return on the cash you put in, with the same calculator as the Theo app.
Quick answer
Gross rental yield is the yearly rent divided by the price: £1,200 a month on a £250,000 property is 5.76%. Net yield takes off running costs such as agent fees, repairs, insurance and empty weeks, which brings it to about 4.31%.
A rental yield calculator should also show cash flow after the mortgage, which on an interest only loan of £187,500 at 5.66% is only about £14 a month before tax.
Updated today
Three numbers that matter
- GrossRent ÷ price. Quick, but flattering.
- NetAfter agent, repairs, insurance, voids.
- Cash flowWhat is left after the mortgage.
The rental yield calculator in Theo
Theo works out gross and net yield, cash flow and the return on your cash, and Premium shows your profit after tax, owning it yourself or through a company.
Costs people forget
- VoidsEmpty weeks between tenants.
- SafetyGas, electrical and other checks.
- ServiceGround rent and service charges.
Will the rent cover it?
Check the lender’s rent test.
Rental yield calculator: gross yield at different rents
| Rent a month | £200,000 home | £250,000 home | £300,000 home |
|---|---|---|---|
| £900 | 5.40% | 4.32% | 3.60% |
| £1,100 | 6.60% | 5.28% | 4.40% |
| £1,300 | 7.80% | 6.24% | 5.20% |
| £1,500 | 9.00% | 7.20% | 6.00% |
Gross yield flatters
£1,200 a month on £250,000 is 5.76% gross, but about 4.31% after running costs.
Rental yield calculator
Running costs start with typical figures. The mortgage is interest only, the way most landlords borrow.
Estimates only. Tax not included. Not advice.
Gross and net rental yield
A rental yield calculator works out two yields. Gross yield is the yearly rent as a percentage of the price. It is quick to work out and useful for comparing properties, but it ignores costs. Net yield takes off running costs first: letting agent fees, repairs and maintenance, insurance, safety certificates, service charges and the rent lost in empty weeks. Net yield is usually one to two percentage points lower.
Cash flow and return on your cash
Cash flow is what is left each month after running costs and the mortgage interest. Return on cash compares a year’s cash flow with the money you actually put in: the deposit, Stamp Duty at the higher rates, legal fees and a survey. With today’s rates, many buy to lets have thin cash flow, so check it before you buy.
What is a good rental yield?
The UK average gross yield is about 5.8%, according to Theo’s rules. Higher yields are common in cheaper areas and in houses in multiple occupation, while expensive areas often yield less but may grow in value faster. A yield only means something once the costs, the mortgage and your tax are counted.
Tax on rental profit
Personal landlords pay income tax on rental profit, with only a 20% tax credit for mortgage interest. Companies pay corporation tax and can deduct interest in full, but taking money out is taxed again. The Theo app compares the two after tax; see limited company buy to let, and speak to an accountant.
Next steps
If the yield works, check what the rent lets you borrow with the buy to let mortgage calculator. An adviser can find a mortgage that makes the numbers work.
Common questions
How do I calculate rental yield?
What is a good rental yield in the UK?
What is the difference between gross and net yield?
Does rental yield include the mortgage?
What running costs should I include?
Keep exploring
Theo App Ltd is not authorised by the Financial Conduct Authority and does not give mortgage advice. This page is information only and is not a recommendation. Estimates only, before tax. Not advice. Speak to an FCA-authorised mortgage adviser about your own circumstances.
Your home may be repossessed if you do not keep up repayments on your mortgage.