Use our calculator above to quickly work out the rental yield on a buy-to-let property, based on the monthly rent and the price you paid.
If you’re weighing up a new investment property or reviewing one you already own, get in touch with our mortgage advisers for help finding a competitive buy-to-let deal.
Rental Yield Calculator
Work out the rental yield on a buy-to-let property.
What Is Rental Yield?
Rental yield is the annual rental income a property generates, shown as a percentage of what the property is worth. It's one of the quickest ways to judge whether a buy-to-let investment is performing well, and it's a figure lenders look at too when assessing affordability for a buy-to-let mortgage.
How Is Rental Yield Calculated?
Our calculator above uses the standard gross rental yield formula:
Gross rental yield = (annual rent ÷ property price) x 100
Annual rent is simply your monthly rent multiplied by 12. Enter your monthly rent and the price you paid for the property above, and the calculator will work out your annual rent and gross yield automatically.
This gives you gross yield, which is useful for a quick comparison between properties, but it doesn't account for running costs like insurance, maintenance, letting agent fees, or void periods. For a fuller picture of your actual return, you'd deduct these costs from your rental income before working out the percentage, giving you net yield instead.
What Is a Good Rental Yield?
As a general guide, a yield of 5% or higher is generally considered good for a residential buy-to-let, with anything higher viewed as strong. What counts as a good yield varies by property type and location, so it's worth comparing similar properties in the same area rather than relying on the benchmark alone.
Rental Yield FAQs
Is Rental Yield Guaranteed?
No. Yield is based on your current rent and property value, both of which can change over time. Rent can rise or fall depending on the local market, and property values fluctuate too, so your yield isn't fixed once calculated.
Is a Higher Yield Always Better?
Not necessarily. A very high yield can sometimes point to higher risk, such as a less desirable location or a property that needs more maintenance than average. It's worth weighing yield alongside other factors, including the potential for the property to grow in value over time.
What's the Difference Between Gross and Net Yield?
Gross yield, which our calculator above works out, only compares rental income to property price. Net yield goes a step further and subtracts your running costs from the rental income first, giving a more accurate picture of what you're actually earning.
Does Rental Yield Affect Capital Growth?
Not directly, but the two often move in opposite directions. Areas with strong potential for capital growth tend to have higher property prices, which pulls the yield percentage down, while areas with more modest growth potential can offer higher yields.
How Do I Calculate Yield on a Renovated Property?
Use the property's current market value, not what you originally paid for it, along with the rent you expect to achieve after the renovation. This gives a more accurate yield going forward than using the pre-renovation figures.