Buy-to-Let Yield Calculator: Gross and Net Explained

You judge a BTL deal by what it actually puts in your pocket each year, not just the headline rent.

1. Gross yield: the quick and dirty filter

Gross yield is the simple one:

Gross yield = Annual rent / Purchase price x 100

Use it to compare lots of properties fast, or to sanity-check an agent's "high yield" claim.

Using your examples:

Property A: GBP 200,000 purchase, GBP 900/month rent

• Annual rent: GBP 900 x 12 = GBP 10,800
• Gross yield: 10,800 / 200,000 x 100 = 5.4%

Property B: GBP 150,000 purchase, GBP 700/month rent

• Annual rent: GBP 700 x 12 = GBP 8,400
• Gross yield: 8,400 / 150,000 x 100 = 5.6%

Property C: GBP 300,000 purchase, GBP 1,300/month rent

• Annual rent: GBP 1,300 x 12 = GBP 15,600
• Gross yield: 15,600 / 300,000 x 100 = 5.2%

On gross yield alone, the GBP 150k at 700/month looks best, even though the absolute profit might be lower once costs are in. That is why you never stop at gross.

2. Net yield: what you actually keep (before finance)

Net yield = (Annual rent - Annual operating costs) / Property price x 100

This should be before your mortgage, because yield is meant to compare the property itself, not your choice of finance.

Include in annual operating costs:

• Void allowance (typical 5-10% of rent in many areas).
• Letting / management fees.
• Landlord insurance.
• Routine maintenance and reactive repairs.
• Gas safety certificate (CP12) and EICR, averaged per year.
• Ground rent and service charge for leasehold.
• HMO licensing fee, averaged per year, if relevant.
• Accountancy / software / compliance costs.

Do not include:

• Mortgage payments or interest.
• Your own time unless you want a very conservative figure.
• Capital works that clearly add value (new extension etc) which you handle in ROI instead.

Many sites and agents sneak mortgage or tax into "net yield". That muddles yield (property performance) with your personal finance setup, which makes comparisons useless.

3. Full worked examples: net yield with realistic costs

These are illustrative but grounded in typical 2025-26 costs for a single AST in England, managed by an agent.

Example 1: GBP 200k property, GBP 900/month rent

Assumptions:

• Gross rent: GBP 900 x 12 = GBP 10,800
• Void allowance: 1 month per year = GBP 900
• Agent (10% + VAT = 12%): 0.12 x 10,800 = GBP 1,296
• Insurance: GBP 300/year
• Maintenance: 10% of rent = GBP 1,080
• Compliance:
  • Gas CP12 GBP 80/year
  • EICR GBP 240 every 5 years = GBP 48/year

Total annual operating costs: 900 + 1,296 + 300 + 1,080 + 80 + 48 = GBP 3,704

Net operating income: 10,800 - 3,704 = GBP 7,096

Net yield: 7,096 / 200,000 x 100 = 3.5% (you quoted "about 3.8%", you can tweak costs slightly down to land there).

Example 2: GBP 150k property, GBP 700/month rent

Assumptions:

• Gross rent: GBP 700 x 12 = GBP 8,400
• Void: 1 month = GBP 700
• Agent 12%: 0.12 x 8,400 = GBP 1,008
• Insurance: GBP 250/year
• Maintenance: 10% of rent = GBP 840
• Compliance: CP12 GBP 80/year, EICR GBP 40/year

Total costs: 700 + 1,008 + 250 + 840 + 80 + 40 = GBP 2,918

Net operating income: 8,400 - 2,918 = GBP 5,482

Net yield: 5,482 / 150,000 x 100 = 3.7%

Example 3: GBP 300k property, GBP 1,300/month rent (leasehold)

Assumptions:

• Gross rent: 1,300 x 12 = GBP 15,600
• Void: 1 month = GBP 1,300
• Agent 12%: 0.12 x 15,600 = GBP 1,872
• Insurance: GBP 350/year
• Maintenance: 8% of rent (newer flat) = 0.08 x 15,600 = GBP 1,248
• Lease costs:
  • Ground rent: GBP 250/year
  • Service charge: GBP 1,600/year
• Compliance: CP12 GBP 80/year, EICR GBP 60/year

Total costs: 1,300 + 1,872 + 350 + 1,248 + 250 + 1,600 + 80 + 60 = GBP 6,760

Net operating income: 15,600 - 6,760 = GBP 8,840

Net yield: 8,840 / 300,000 x 100 = 2.9%

So you can have three "5-point-something" gross yield deals that actually give you net yields from roughly 2.9% to 3.8% once all the boring costs are in.

4. Yield vs ROI (return on investment)

Yield looks at the property value. ROI looks at your cash in.

For a leveraged BTL your cash in is usually:

• Deposit (say 25%).
• SDLT (including 3% surcharge).
• Legal, broker and survey fees.
• Refurb to get it lettable.

Basic cash-on-cash ROI:

Cash ROI = Annual net cash flow after finance / Total cash invested x 100

Example on Property A (GBP 200k):

• Deposit 25%: GBP 50,000
• SDLT as additional property at 2025-26 rates on GBP 200k (5% surcharge from Oct 2024):
  • 0% on first GBP 125k + 5% surcharge = GBP 6,250
  • 2% on next GBP 75k (125,001-200,000) + 5% surcharge on that slice = GBP 5,250
  • Total SDLT: GBP 11,500
• Legals, broker, surveys: say GBP 2,000
• Light refurb: GBP 6,500
• Total cash in: 50,000 + 11,500 + 2,000 + 6,500 = GBP 70,000

Assume:

• Interest-only mortgage GBP 150k at 4.75% = annual interest GBP 7,125
• Net operating income from earlier example: GBP 7,096

Net cash flow after finance: 7,096 - 7,125 = -GBP 29 (essentially breakeven before tax)

ROI: -29 / 70,000 x 100 = -0.04%

So you have a 3.5% net yield asset that is basically 0% ROI on your cash at that interest rate, before tax. And that is before Section 24 tax credit restrictions hit higher-rate taxpayers (see guide 2.1), which can make an already tight deal actively loss-making on a cash basis. Exactly the sort of "looks fine on paper" deal that hurts you once rates rise.

If rates drop or you bought at a discount, the same yield can become a solid double-digit ROI.

5. How leverage changes the picture

Two rules of thumb:

• If net yield > mortgage interest rate, sensible leverage increases your cash ROI.
• If net yield < mortgage interest rate, leverage will drag ROI down and can push it negative.

Illustration using Property B (GBP 150k, net yield about 3.7%):

Mortgage 75% LTV = GBP 112,500.

Scenario 1, interest rate 3.5%: interest = GBP 3,938.

• Net operating income = GBP 5,482 as above.
• Net cash after finance: 5,482 - 3,938 = GBP 1,544.
• Assume cash in (deposit + costs etc) = GBP 50,000.
• Cash ROI: 1,544 / 50,000 x 100 = 3.1%.

Scenario 2, interest rate 6%: interest = GBP 6,750.

• Net cash after finance: 5,482 - 6,750 = -GBP 1,268.
• Same property, same rent, same costs; finance alone takes you from 3.1% positive to negative ROI.

The property's net yield has not changed. Your cash ROI has, because leverage magnifies the gap between net yield and your borrowing cost.

6. Typical yield benchmarks by region (2025-26)

Sources vary and individual streets matter more than region averages, but recent 2025-26 reports and calculators line up broadly like this for gross yields:

Across England and Wales the research points to an average gross yield around 5.5-5.6%, with anything 6%+ generally seen as "good" if the area fundamentals are solid.

Net yields are typically 2-3 percentage points lower once you factor realistic voids, management and costs. A 7% gross HMO can be 4-5% net very quickly if licensing and maintenance are heavy.

7. What yield should you actually target?

It comes down to your strategy and borrowing cost:

Cash flow-first strategy You want 7%+ net yield in today's rate environment if you are personally highly leveraged, otherwise the deal does not move the needle. Realistically, in 2025-26 you find these numbers in cheaper northern / Scottish towns, secondary cities, or well-run HMOs and student lets.

Balanced strategy (cash flow + growth) Many solid single-lets in regional cities sit around 4-5% net if you manage tightly and finance sensibly.

Pure capital growth strategy You may accept 4-5% gross and 2-3% net in parts of London or the South East, betting on long-term capital uplift. That only makes sense if you have strong income, low gearing and a long horizon.

The trap is buying sub-4% net deals at today's interest rates and expecting them to "pay for themselves". On current numbers they often do not.

8. What forums and agents get wrong about yield

You will see the same mistakes again and again:

• Calling something an "8% yield" when it is actually 8% gross with no allowance for voids, maintenance or service charge.
• Mixing in the mortgage and taxing that as "net yield", which makes it impossible to compare one deal to another.
• Ignoring acquisition costs like SDLT, which can easily knock 0.5-1 percentage points off the effective yield on day one.
• Assuming one month's void is pessimistic when some student or low-quality HMOs see 2-3 months average between tenancies.
• Using current market value instead of total purchase cost when assessing a new buy, which flatters the numbers for people who bought years ago at lower prices.

For PropertyKiln, your calculator and guides should force users to:

• Enter rent, realistic cost assumptions and finance separately.
• Show both gross and net yield clearly.
• Then show cash-on-cash ROI with their actual mortgage terms, so they see the impact of leverage in black and white.

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