Important: This calculator provides an estimate, not financial or tax advice. It does not include mortgage interest, income tax, capital gains tax, changes in property value or every possible cost.
What is rental yield?
Rental yield measures the annual rental income from a property as a percentage of its value or total investment. It is commonly used by landlords and investors to compare potential buy-to-let properties.
Gross rental yield
Gross yield is a quick comparison measure. It uses annual rent before expenses and the property purchase price.
Gross yield = (monthly rent × 12 ÷ property price) × 100
For example, a property costing £200,000 and renting for £1,000 per month has annual rent of £12,000. Its gross yield is 6%.
Net rental yield
Net yield gives a fuller picture by allowing for annual property costs and the total cash invested to buy the property.
Net yield = ((annual rent − annual expenses) ÷ (property price + buying costs)) × 100
Buying costs can include Stamp Duty Land Tax, legal fees, surveys and refurbishment work. Annual expenses can include letting-agent fees, maintenance, insurance, service charges, licences and periods when the property is empty.
What should UK landlords consider?
- Local market rent and likely void periods
- Management, maintenance and safety-compliance costs
- Leasehold service charges and ground rent where applicable
- Mortgage payments and interest-rate changes
- Landlord tax obligations and any professional advice required
Looking to let in Coventry City?
Synergy Estate Agents can help you get a free rental valuation.
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