What this calculator does
Takes property value, monthly rent, and annual costs. Returns gross yield, net yield, and annual net income.
The formula
Gross yield = (Annual rent / Property value) × 100 Net yield = (Annual rent − Annual costs) / Property value × 100 Annual net income = Annual rent − Annual costs Annual costs typically include: - Letting agent fees (typically 8–15% of rent) - Landlord insurance - Maintenance and repairs allowance - Void period allowance - Ground rent / service charge (leasehold) Note: mortgage interest is NOT included in yield — it is a financing cost, not an operating cost. Net yield is pre-finance.
Assumptions
- Annualised rent assumes full occupancy minus any void allowance entered by the user.
- All costs are entered by the user — the calculator does not estimate them automatically.
- Mortgage payments are excluded from net yield, as yield is a measure of operating return on the asset, not return on equity.
- Property value is taken as the current market value or purchase price — the user selects which is appropriate.
Data sources
No external regulatory data sources are used. Gross yield and net yield are standard property investment metrics; they have no statutory or regulatory definition. The formulas applied are universally accepted conventions within the UK property investment industry.
Limitations
- Does not calculate return on investment (ROI) including mortgage leverage — a leveraged property investment can show a much higher return on the cash deployed than the gross or net yield figure suggests.
- Does not model capital growth — yield is an income return measure only.
- Does not model income tax on rental profit. Use the income tax calculator to estimate the tax due on net rental income.
- Section 24 mortgage interest restriction is not modelled here — since April 2020, residential landlords can only claim a 20% basic rate tax credit on mortgage interest rather than deducting it in full. This affects cash-after-tax returns but not yield as conventionally calculated.
- Does not include stamp duty, purchase costs, or capital improvements in the yield calculation.
Worked example
Inputs: property value £220,000, monthly rent £1,100, annual costs £2,200.
Annual rent = £1,100 × 12 = £13,200
Gross yield = (£13,200 / £220,000) × 100 = 6.0%
Net yield = (£13,200 − £2,200) / £220,000 × 100
= £11,000 / £220,000 × 100
= 5.0%
Annual net income = £11,000
Changelog
| Date | Change |
|---|---|
| May 2026 | Initial publication |