About the Rental Yield Calculator
This rental yield calculator shows the annual income a property produces as a percentage of what it costs to buy. Gross yield is the quick headline figure — a year’s rent divided by the purchase price — and is what agents and property portals usually quote. Net yield is the more honest number: it deducts vacancy and running costs from the rent and divides by the full cost of buying, including stamp duty, legal fees or closing costs.
Landlords and buy-to-let investors use yield to compare properties in different areas and price bands, and to judge whether the income justifies the price. The rent needed to hit a target yield is shown too, which helps when negotiating or setting rent.
Yield is calculated before mortgage costs and income tax, so it works in any country and currency. If you are borrowing, check the cash-on-cash return or the mortgage interest coverage separately.
With the default inputs, the gross rental yield is 6%. Change any value above to recalculate instantly.
How to use the rental yield calculator
- 1Enter the purchase price and expected monthly rent.
- 2Add one-off purchase costs such as transfer tax, legal fees and refurbishment.
- 3Add yearly running costs like management, repairs, insurance and service charges.
- 4Set a vacancy allowance for empty weeks between tenants.
- 5Compare the gross and net yield, and check the rent needed for your target yield.
Formula and method
Gross yield compares a full year of rent with the purchase price alone. It is simple and widely quoted, but it ignores everything that reduces income and the extra money needed to complete a purchase.
Net yield first reduces rent by the vacancy allowance and the annual running costs, then divides by the total cost of acquiring the property — price plus purchase costs such as transfer taxes, legal fees and initial repairs. The rent needed for a target yield reverses the net-yield formula. Mortgage interest and income tax are excluded in both measures.
- R
- Annual rent (monthly rent × 12)
- P
- Purchase price
- C
- Purchase costs (taxes, fees, refurbishment)
- E
- Annual running costs
- v
- Vacancy allowance as a fraction of rent
Worked examples
$300k flat let at $1,500 a month
A year’s rent of $18,000 on a $300,000 price is a 6% gross yield. Losing 4% to voids ($720) and $3,600 to running costs leaves $13,680, which is 4.47% of the $306,000 total purchase cost. Reaching a 5% net yield would need about $1,641 a month.
180,000 terraced house let at 950 a month
Rent of 11,400 a year on a 180,000 price is a 6.33% gross yield. After a 5% void allowance and 2,100 of costs, net income is 8,730 on a total outlay of 189,500 — a 4.61% net yield.
High-yield student let
Room-by-room rent of $25,200 a year gives an 11.45% gross yield. Higher voids and $6,500 of bills and management bring net income to $16,684, a 7.19% net yield on $232,000 — still strong, but far below the headline figure.
Frequently asked questions
What is a good rental yield?+
Many investors treat a gross yield of 5%–8% as reasonable for standard residential lets, with higher yields in cheaper areas and on houses in multiple occupation, and lower yields in expensive city centres. Always judge a property by its net yield after costs.
What is the difference between gross and net rental yield?+
Gross yield is annual rent divided by the purchase price. Net yield subtracts running costs and vacancies from the rent and divides by the full purchase cost including taxes and fees, so it is always lower and closer to your real return.
Does rental yield include mortgage payments?+
No. Yield measures the property’s income against its price regardless of financing. To see the effect of a mortgage, use a cash-on-cash return calculator, which divides cash flow after loan payments by the cash you invested.
Is rental yield the same as cap rate?+
They are very similar. Net rental yield and cap rate both divide net income by the property’s cost or value. Cap rate typically uses market value and excludes purchase costs, while net yield often includes them.
How do I increase my rental yield?+
You can raise rent in line with the market, reduce voids with longer tenancies, cut running costs, add income such as parking, or buy at a lower price. Converting to a house share or furnished let can raise yield but also increases costs and work.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.