Calculator
Rental yield calculator
The short version: gross yield is the year's rent divided by the purchase price. Net yield takes running costs off the rent and divides by everything you actually spent, including stamp duty, legal costs and any refurbishment. Net is the number to compare deals on.
Total purchase cost £192,100, including £10,100 stamp duty at the additional-property rate. Net yield here is before mortgage interest and tax. Capital at risk: rents and values can go down as well as up, and voids, repairs and arrears all reduce real returns.
The formulas
- Gross yield = monthly rent × 12 ÷ purchase price × 100
- Net yield = (annual rent − running costs) ÷ (price + stamp duty + legal costs + refurbishment) × 100
Running costs usually include letting and management fees, insurance, repairs, certificates, service charges and an allowance for empty months. Many investors use 20% to 30% of the rent as a starting point and replace it with real quotes once they have them.
Worked example
A £180,000 flat let at £1,100 a month earns £13,200 a year: a 7.33% gross yield. Allowing 25% for running costs leaves £9,900. Total spend is £180,000 plus £10,100 stamp duty at the additional-property rate (5% on the first £125,000 and 7% on the next £55,000) plus £2,000 legal costs, so £192,100. The net yield is 5.15%.
What yield does not tell you
- Mortgage interest, which for most investors is the biggest cost.
- Tax on rental profit, which depends on whether you buy personally or through a company.
- Capital growth or loss when you sell.
- Whether the rent is realistic. Check it against what similar homes nearby have actually let for.
Every DealSold deal shows where its rent figure came from
Each figure on a deal is labelled verified, third-party or the sourcer's estimate, so you know which numbers to test.
Capital at risk. Property values and rents can go down as well as up.
How we made this
Stamp duty uses the England and Northern Ireland additional-property rates from GOV.UK, checked on the date shown. The example figures are illustrative, not a forecast. General information, not financial advice.