Rental Yield Calculator
Use our calculator to assist you in working out what both your gross rental yield and your net rental yield would be annually.
What is rental yield?
Rental yield is used to assess the profitability of a rental property. It represents the annual rental income generated by a property relative to the properties market value. Rental yields can vary significantly across different regions in the UK.
Understanding rental yield is crucial to help understand the potential profitability and financial sustainability of rental properties.
How do I calculate the rental yield?
In the UK, rental yield is usually expressed in two forms: gross rental yield and net rental yield.
Gross rental yield considers the total rental income over a one year period without deducting any expenses relating to the property such as home insurance, maintenance fees and mortgage costs. It gives an overview of how much income can be generated from a property without taking into account the expenses associated with keeping the property.
Net rental yield gives a more precise idea of the property’s profitability by taking into account the expenses that come with owning a property.
Are there other costs I need to consider outside of rental yield?
Mortgage costs
If you are financing the property with a mortgage these payments will be a monthly outgoing cost which will have to be taken into consideration.
Stamp duty
In the UK Stamp Duty is a tax which has to be paid on property purchases over a certain value. The amount depends on the property's value and whether it's your primary residence or an additional property (higher rates apply to second homes).
Calculate the potential stamp duty before making an offer. Access our Residential Stamp Duty Calculator to get an accurate estimate.
Maintenance and repair fees
Ongoing Maintenance which includes keeping the property in good condition servicing appliances, and garden upkeep is a further cost to take into consideration. Repairs in the UK are also the responsibility of the landlord not the person renting the home.
Insurance
Landlord insurance covers risks such as damage to the home or loss of rental income. Building insurance is also typically required by mortgage lenders.
Letting Agent Fees
If you are using a letting agent to manage the property they will require a fee. Letting agent fees typically range from 8% - 15% of the rental income and depend on the level of service provided.
Void property
If there are no tenants for a period the landlord will be responsible for all of the fees.
Economic Factors
Broader economic factors such as inflation, changes in interest rates and housing policies can also impact rental yields.