Rental Yield Calculator
Last updated: 27 June 2026
Reviewed by Gavin Meiring, Lead research and primary author · Doctoral Candidate (Corporate Governance) · Research and drafting assisted by AI
- Rental yield is the annual rent expressed as a percentage of the property's value — the property world's equivalent of a dividend yield.
- The word 'yield' comes from the Old English 'gieldan', meaning 'to pay', and entered property finance from agriculture, where a field 'yields' its crop.
- Yields and price growth tend to move in opposite directions: in markets like London or New York, where prices ran ahead of rents, gross yields have often been under 4%, while cheaper regional markets can offer 7% or more.
Rental Yield Calculator
A rental yield calculator converts your property's annual rental income into a percentage return relative to the property value or purchase price. It is used by buy-to-let investors, landlords, and property developers to quickly assess and compare the income-generating potential of different investment properties.
How to Use the Rental Yield Calculator
- Enter the annual gross rental income, or your monthly rent multiplied by 12.
- Enter the property value or purchase price.
- For gross yield, divide annual rent by property value and multiply by 100.
- For net yield, first subtract annual costs (mortgage interest, agent fees, maintenance, insurance, and void allowance) from gross rent, then divide by property value.
- Compare the resulting yield to alternative investments and local market averages to assess attractiveness.
The Formula
Gross Rental Yield (%) = (Annual Rent / Property Value) x 100
Net Rental Yield (%) = ((Annual Rent - Annual Costs) / Property Value) x 100
The gross yield gives a quick headline figure and is useful for initial comparison. The net yield is the more accurate measure of actual return, as it accounts for the real costs of running a buy-to-let property.
Real-World Example
You are assessing a flat costing £180,000. The market rent is £950 per month, giving annual gross rent of £11,400.
Gross Yield = (£11,400 / £180,000) x 100 = 6.3%.
Annual costs: letting agent fees (10%) = £1,140, maintenance and repairs = £600, landlord insurance = £250, void allowance (4 weeks) = £875. Total annual costs = £2,865.
Net annual income = £11,400 - £2,865 = £8,535.
Net Yield = (£8,535 / £180,000) x 100 = 4.7%.
If you use a mortgage to fund the purchase, the net yield calculated on equity deployed (your deposit) will be higher, reflecting the gearing effect.
Regional Yield Differences Across the UK
Rental yields vary significantly by location. Properties in London and the South East typically offer gross yields of 3-5%, reflecting high property prices relative to rents. Northern cities such as Manchester, Liverpool, Birmingham, and Leeds frequently offer gross yields of 6-9%, making them attractive to income-focused investors. However, capital growth patterns differ too, with southern markets historically delivering stronger price appreciation. Investors must decide whether they prioritise income yield or capital growth, as markets that offer one tend to offer less of the other.
Frequently Asked Questions
What is a good rental yield in the UK? A gross yield of 5-8% is generally considered attractive for UK buy-to-let. Net yields after all costs are typically 1-2% lower. In high-value urban markets, yields of 3-4% gross are common, with capital appreciation expected to compensate for the lower income return.
Should I use gross or net yield to compare properties? Net yield is more meaningful as a true return measure. However, gross yield is useful for quick comparisons when full cost data is not yet available. Always calculate net yield before committing to a purchase.
How does a mortgage affect rental yield? A mortgage reduces the cash deployed (you use a deposit rather than the full purchase price) but adds an annual cost in the form of mortgage interest. The yield on equity deployed can be much higher than the yield on the full property value when gearing is used and when the mortgage rate is lower than the gross yield.
Does rental yield change over time? Yes. If rents increase while the property value stays static, yield improves. If property values rise while rents stay flat, yield falls. Reviewing your yield annually helps you assess whether to hold, sell, or remortgage.
From gross to net, line by line
The gap between the two yields on this page is the cost stack, and it is worth seeing each line separately because two of them are assumptions rather than bills.
| Line | Amount | How it is derived |
|---|---|---|
| Annual rent | £11,400 | £950 a month multiplied by 12 |
| Letting agent fees | £1,140 | 10% of the annual rent |
| Maintenance and repairs | £600 | an allowance, not an invoice |
| Landlord insurance | £250 | buildings and contents cover |
| Void allowance | £875 | four weeks, taken as 4/52 of the annual rent |
| Total annual costs | £2,865 | the four lines added |
| Net annual income | £8,535 | £11,400 less £2,865 |
| Gross yield | 6.33% | £11,400 divided by £180,000 |
| Net yield | 4.74% | £8,535 divided by £180,000 |
The void allowance is the line that gets argued about most. A £950 monthly rent is £219.23 a week on a 52-week year, so four weeks come to £876.92, which the page rounds to £875. Reading the £950 as a weekly rent instead of a monthly one gives £3,800, and that misreading is worth £2,925 a year in this example. The check is to convert to one basis before multiplying: monthly rent times 12, divided by 52, times the number of void weeks.
The 1.59 percentage point gap between gross and net is the whole reason to compute both. A property that looks like a 6.33% investment is a 4.74% investment once it is running, and the difference is not a rounding error. It is the cost of the building existing.
What gearing does to the return on your deposit
A mortgage does not change the income the property produces. It changes the capital you had to find to produce it, and that is what moves the return.
Purchase with a 25% deposit: £45,000 down, £135,000 borrowed on an interest-only basis.
| Mortgage rate | Annual interest | Income after interest | Return on the £45,000 deposit |
|---|---|---|---|
| 3.50% | £4,725 | £3,810 | 8.47% |
| 4.20% | £5,670 | £2,865 | 6.37% |
| 4.50% | £6,075 | £2,460 | 5.47% |
| 5.00% | £6,750 | £1,785 | 3.97% |
| 6.00% | £8,100 | £435 | 0.97% |
| 6.32% | £8,532 | £3 | 0.01% |
| 7.00% | £9,450 | minus £915 | minus 2.03% |
Three rates matter here. The gross yield on the property value is 6.33%. The net yield on the property value is 4.74%. The return on the deposit, at a 4.5% mortgage rate, is 5.47%. Gearing lifts the return on the deposit above the net yield while the mortgage rate sits below the net yield, and it destroys the return once the mortgage rate passes the net yield, which happens at 6.32% on these numbers. The threshold is the net income divided by the mortgage balance, so it moves with the costs as well as with the rent.
Two qualifications belong with the table. Interest-only is a simplification: a repayment mortgage costs more each month but pays down the balance, and that capital repayment is a second return that the income figure does not show. And the table ignores tax on the rental profit, which for a higher-rate taxpayer facing the mortgage interest restriction can remove a large part of the margin at any rate above about 4%.
Current rent levels across the UK
The Office for National Statistics publishes average private rents by nation and region each month, which is the figure to compare against when you are testing whether a local rent is realistic.
| Area | Average monthly rent | Annual change |
|---|---|---|
| England | £1,442 | up 3.4% |
| Scotland | £1,009 | up 1.0% |
| Wales | £836 | up 4.7% |
| Northern Ireland | £876 | up 3.3% |
| United Kingdom | £1,383 | up 3.3% |
These are the 12 months to May 2026, with Northern Ireland running to March 2026 because its rent data are collected differently. Rent inflation ranged from 5.9% in the North East to 2.0% in London over the same period. A £950 rent on an £180,000 flat takes a gross yield of 6.33%. Put the England averages from the same release through the same sum, £1,442 a month against the £291,000 England average house price, and you get 5.95%. The example sits above that national pairing, which is the kind of result the northern cities produce. London pairs the highest England rent with the lowest rent inflation in the country, which is the income-against-growth trade described above, seen in published data rather than in theory.
Assumptions behind the cost line
Every figure in the cost stack is an estimate of something that will vary. The agent fee is a percentage of rent, so it rises automatically when the rent does, and a landlord who self-manages removes it and takes on the work instead. Maintenance is a fixed allowance here, and it should not stay fixed: a 1930s terrace and a 2015 new-build flat have very different maintenance profiles, and a figure of 3% to 5% of rent is a more useful starting point for an older building. Insurance is a genuine quote rather than a percentage, and it changes with the building, the contents and the flood risk.
Two costs are missing from the example and both are material on flats. Service charges and ground rent on a leasehold property are paid whether the flat is let or empty, and they are excluded from the net yield above because the example describes a freehold purchase. Stamp duty or land transaction tax at purchase sits outside the yield calculation entirely, because it is a cost of acquisition rather than a cost of running the property. It still reduces the return on the money the investor actually deployed, and it belongs in the total return calculation rather than in the yield.
The property value in the denominator has a choice inside it too. The purchase price gives the yield at the moment of buying, which is the only figure that compares two properties fairly. The current market value gives the running yield on today's value, which is the figure to watch once you own the property and are deciding whether to hold. Both are correct, and they answer different questions.
Where the rent figures come from
The rent and region figures in the table above come from the Office for National Statistics release Private rent and house prices, UK, which publishes the Price Index of Private Rents and the UK House Price Index together. The UK average of £1,383 and the nation and region averages are the 12 months to May 2026, and the release records rent inflation as highest in the North East at 5.9% and lowest in London at 2.0% over the same period.
The release notes that its Scottish and Northern Irish estimates are collected differently from the rest of the UK and should be compared with care, and that the Northern Ireland rent series runs two months behind. The average house price in the same release was £270,000 across the UK in the 12 months to April 2026. Use the published series rather than a remembered figure when you set the property value for a yield calculation, because a yield is a ratio and both halves of it move.
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