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Landlords & Property2 min check
Rental Yield Calculator
Step 1 of 20%
How it works
Gross yield ignores all costs. Net yield is the realistic return: (annual rent − annual running costs) ÷ property value × 100. ROI on cash deposit is even higher because mortgage gearing amplifies returns (and losses).
Worked example
£200k house, £950/m rent = £11,400/year. Gross yield 5.7%. Less £400/m mortgage interest, £700 insurance, £700 agent, £1k maintenance, 1 month void → net £4,250 ÷ £200k = 2.1% net.
Who should use this
- •First-time landlords screening properties
- •Investors comparing North vs South opportunities
- •Anyone reviewing existing portfolio performance
Common mistakes
- ×Quoting gross yield as if it's profit (it isn't)
- ×Forgetting void periods (assume at least 1 month/year)
- ×Ignoring Section 24 mortgage interest restrictions for individuals
- ×Not accounting for major works (roof, boiler) in long-run yield
Frequently asked questions
What's a good rental yield in the UK?▾
5%+ gross is decent. 8%+ is strong but often higher risk areas. London 3–5%, Manchester/Liverpool 6–9%.
Should I buy via a Ltd Co?▾
Often yes if higher-rate taxpayer or building a portfolio — but mortgages are pricier and you pay corporation tax + dividend tax to extract profit.
What's the 1% rule?▾
US rule of thumb: monthly rent ≥ 1% of price. Rare in the UK now — 0.5–0.6% is typical.