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Property · Calculator

Buy-to-Let Yield Calculator

Yield is the single most-quoted number in BTL — and the most misunderstood. Gross yield ignores everything but rent. Net yield is what you actually keep.

£
£
£

Gross yield

6.24%

Net yield

5.24%

Annual numbers

  • Gross rent (12 × monthly)
    £15,600
  • Running costs
    −£2,500
  • Net rental income
    £13,100

How we calculated your result

Gross yield = annual rent ÷ property price × 100. Net yield deducts annual costs (insurance, management, maintenance, void allowance) before dividing.

Official UK rules in simple English

  • No legal definition — yields are presented before mortgage interest by convention.
  • Allow 5–10% of rent for voids, 10% for letting agency, and ~£500/yr for landlord insurance.
  • Section 24 (since 2020) means mortgage interest is no longer deductible against income — taxed as personal income with a 20% credit instead.

Common pitfalls to watch out for

  • ⚠ Gross is vanity, net is sanity

    A 6% gross yield with 30% costs is only 4.2% net. Always run both.

  • ⚠ Ignore capital growth at your peril

    London BTL has been low-yield / high-growth. The North has been the reverse. Total return = yield + growth.

  • ⚠ Mortgage rates eat into net

    A 5.5% mortgage on a 6% gross yield leaves almost nothing after tax. Stress-test at 7%.

Frequently asked questions

What yield is good?
Rule of thumb: 6%+ gross outside London, 4%+ in London. Anything under inflation + mortgage rate is loss-making in real terms.
Should I form a Ltd company?
If you’re a higher-rate taxpayer with multiple BTLs, yes — Corporation Tax + mortgage interest deductibility usually beats personal ownership.

Illustrative. Property is illiquid and tax-sensitive — speak to an accountant.

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