How to Calculate Rental Yield in the UK: Step-by-Step Guide
Introduction
Buying or remortgaging a UK home involves a string of calculations, from stamp duty and deposits to monthly repayments. Doing them before you speak to a broker or agent puts you in a much stronger position.
This guide explains how to calculate rental Yield in the UK, step by step. Work out gross and net rental yield on a buy-to-let property. You'll see the formula, a fully worked example and practical tips for UK readers.
What this calculation covers
Work out gross and net rental yield on a buy-to-let property.
A few percentage points on LTV, rate or tax can change what you pay by thousands of pounds. Running the numbers early helps you set a realistic budget and compare deals properly.
The method and formula
Gross yield is annual rent divided by property price. Net yield takes off yearly costs such as letting fees, insurance and repairs first.
Every figure on our rental Yield Calculator follows this method, so you can check the working yourself.
Worked example
Here's a typical example using these figures:
| Input | Value |
|---|---|
| Property price | £200,000 |
| Monthly rent | £1,000 |
| Annual running costs | £2,400 |
Running them through the method gives:
| Result | Value |
|---|---|
| Net yield | 4.80% |
| Gross yield | 6.00% |
| Annual profit before tax and mortgage | £9,600.00 |
The headline figure is net yield: 4.80%. Change any input and the result will move with it.
How to use the calculator
- Enter or choose property price (£).
- Enter or choose monthly rent (£).
- Enter or choose annual running costs (£).
- Read your results. The main figure is shown at the top, with a breakdown underneath.
- Try different values to compare scenarios side by side.
Tips for UK readers
- Stamp duty rules differ by nation: SDLT in England and Northern Ireland, LBTT in Scotland and LTT in Wales.
- Lenders price mortgages in LTV bands, so a slightly bigger deposit can unlock a noticeably lower rate.
- Always compare the total cost of a mortgage deal including fees, not just the headline rate.
- Most lenders let you overpay up to 10% of the balance each year without early repayment charges.
Frequently asked questions
What's the quickest way to work out rental Yield?
Use our free rental Yield Calculator. It applies this method automatically: Gross yield is annual rent divided by property price. Net yield takes off yearly costs such as letting fees, insurance and repairs first.
Do these calculators cover Scotland and Wales?
Yes. We have separate calculators for LBTT in Scotland and Land Transaction Tax in Wales, as well as SDLT for England and Northern Ireland.
Are the mortgage figures a mortgage offer?
No. They are estimates. A lender's decision depends on your credit history, outgoings and their own affordability checks.
How accurate is the monthly repayment?
It uses the standard repayment formula and matches lender illustrations closely for a fixed rate, but actual payments can vary if your rate changes.
Summary
To work out rental Yield, follow the method above: Gross yield is annual rent divided by property price. For a quick, accurate answer with your own figures, use the calculator.
Try the rental Yield Calculator
Enter your own figures and get an instant answer – free, no sign-up.
Open the rental Yield CalculatorNext, read Rental Yield: Common Mistakes, Tips and FAQs.
More property and mortgages guides
- How to Calculate Stamp Duty in the UK: Step-by-Step Guide
- How to Calculate LBTT in Scotland in the UK: Step-by-Step Guide
- How to Calculate Land Transaction Tax in Wales in the UK: Step-by-Step Guide
- How to Calculate Mortgage Repayments in the UK: Step-by-Step Guide
- How Much You Can Borrow for a Mortgage in the UK: Step-by-Step Guide
This guide is general information, not financial, tax, legal or medical advice. Figures use 2025/26 UK rates where relevant. Always check GOV.UK or NHS.uk for official guidance.