Is the rent worth the price?
Work out the gross and net yield on a rental property, what it leaves you each month, and the return on the cash you put in.
Net yield
5.5%
Gross yield 6.8%. Net yield takes off empty weeks and running costs, before the mortgage.
- Rent collected a year
- £9,808
- Running costs a year
- £1,500
- Mortgage interest a year
- £5,625
- Cash flow a month, before tax
- £224
- Cash you put in
- £46,500
- Return on your cash, before tax
- 5.8%
Figures are before income tax, and the mortgage is treated as interest-only. Use the landlord tax calculator to see the tax on the profit. A guide, not financial advice.
Frequently asked questions
What is rental yield?
Gross yield is a year’s rent divided by the price you paid, as a percentage. Net yield takes off running costs and empty weeks first, so it’s a truer picture of what the property earns before the mortgage.
What is a good rental yield in the UK?
It depends on the area and the type of property. Cheaper areas usually have higher yields and lower capital growth, and city-centre flats often the reverse. Compare net yield and monthly cash flow rather than gross yield alone.
What costs should I include?
Letting agent fees if you use one, insurance, repairs, gas safety and electrical checks, service charge and ground rent for flats, and a few empty weeks between tenants. Put stamp duty or LBTT, legal fees and refurbishment in buying costs.
Does this include tax?
No. The figures are before income tax. Use our landlord tax calculator to estimate the tax on your rental profit, including the rules on mortgage interest.