Rental Yield Calculator United Kingdom 2026-27
Gross and net rental yield, the cash flow after mortgage interest, and the cash-on-cash return on the deposit — with voids, letting fees and running costs taken off before anything is called income.
Gross yield is annual rent over the property value, which is the number every listing quotes and the least useful one: it ignores every cost.
| Gross rent | £14,400.00 |
|---|---|
| Expenses | -£5,152.00 |
| Vacancy | -£553.85 |
| Mortgage interest | -£15,600.00 |
| Cash flow | -£6,905.85 |
How the rental yield calculator works
Gross yield is annual rent over the property value, which is the number every listing quotes and the least useful one: it ignores every cost. Net yield takes voids, letting and management fees and running costs off the rent first. Cash flow goes one step further and subtracts mortgage interest, and it is the number that decides whether you can hold the property — a 5% gross yield and a negative cash flow are perfectly compatible. Cash-on-cash return measures that cash flow against the deposit you actually put in. A shortfall matters more in the UK than elsewhere, for two reasons: a rental loss can only be carried forward against future rental profits, never against your salary; and since the Section 24 phase-in, mortgage interest is not a deduction from rental income at all but a 20% tax credit, so a higher-rate landlord is taxed on rent before interest. Many buy-to-lets are held in a company for that reason, which is a decision with its own costs.
Formula: gross yield = annual rent ÷ value · net yield = (rent − vacancy − costs) ÷ value · cash flow = net rent − mortgage interest · cash-on-cash = cash flow ÷ deposit
How rental yield is calculated on investment property
Gross yield formula
Gross rental yield = (Annual rental income ÷ Property value) × 100. For a £300,000 property renting at £1,200/month: (£1,200 × 12) ÷ £300,000 × 100 = 4.8% gross yield.
| Property value | Monthly rent | Annual rent | Gross yield |
|---|---|---|---|
| £150,000 | £700 | £8,400 | 5.6% |
| £200,000 | £850 | £10,200 | 5.1% |
| £300,000 | £1,200 | £14,400 | 4.8% |
| £400,000 | £1,500 | £18,000 | 4.5% |
| £600,000 | £1,800 | £21,600 | 3.6% |
Rental yield examples by city and property type — 2025
| City/area | Typical property price | Monthly rent | Gross yield |
|---|---|---|---|
| London Zone 1–2 | £600,000 | £1,800 | 3.6% |
| London outer boroughs | £350,000 | £1,300 | 4.5% |
| Manchester city centre | £220,000 | £1,000 | 5.5% |
| Birmingham | £200,000 | £900 | 5.4% |
| Leeds | £180,000 | £850 | 5.7% |
| Edinburgh | £250,000 | £1,050 | 5.0% |
| Regional UK | £150,000 | £700 | 5.6% |
Gross yield vs net yield — what the numbers really mean
Typical annual costs on a £600,000 property
Management fees: £1,200–£1,800 (8–12% of rent). Council tax: £1,200–£2,500. Service charges: £500–£2,000. Insurance: £300–£600. Maintenance (1% rule): £3,000. Total: approximately £6,000–£9,000/year.
Impact on net yield
A 4.8% gross yield on a £300,000 property with £7,000/year in costs produces: (£14,400 − £7,000) ÷ £300,000 = 2.5% net yield. This is significantly lower than the gross figure and is the true income return before mortgage interest.
By cityRental yield comparison across major UK cities — 2025
These figures are indicative ranges for established residential property. Yields vary significantly by suburb, property type, and condition.
| City | Typical gross yield range | Growth outlook | Comment |
|---|---|---|---|
| London | 2.5–4.0% | Moderate | High prices compress yields |
| Manchester | 4.5–6.0% | Strong | Strong rental demand from growing economy |
| Birmingham | 5.0–6.5% | Strong | Regeneration driving demand |
| Leeds | 5.5–7.0% | Strong | Undersupply driving rent growth |
| Edinburgh | 4.0–5.5% | Moderate | Tourism and student demand |
| Bristol | 4.0–5.5% | Moderate | Tech sector supports demand |
| Newcastle | 6.0–8.0% | Variable | High yields but lower capital growth |
leveraged property investment — when costs exceed rental income
Can I offset rental losses against my income?
No. Unlike some countries, UK rental losses cannot be set against your salary or other income — a loss can only be carried forward and set against future profits of the same UK property business. Since April 2020, mortgage interest is not a deductible expense either: instead you receive a 20% basic-rate tax credit on finance costs (Section 24), which is why higher-rate landlords now keep less than they used to.
Section 24 worked example
On £12,000 rent with £9,000 mortgage interest and £2,000 of other costs, taxable profit is £10,000 (rent minus the £2,000 — interest is not deducted). A higher-rate (40%) landlord owes £4,000, reduced by a 20% × £9,000 = £1,800 finance-cost credit, leaving £2,200 of tax.
Risk
Buy-to-let returns depend on both rental yield and capital growth. A property that neither grows in value nor produces positive post-tax cash flow is a poor investment — and the Section 24 restriction plus the 5% SDLT surcharge on additional homes have squeezed leveraged landlords in particular.
Positive cash flowPositive cash flow — when rental income exceeds costs
What is a cash-flow-positive let?
A buy-to-let is cash-flow positive when rental income exceeds all costs including mortgage interest. The rental profit is taxable at your marginal Income Tax rate, with the Section 24 basic-rate finance-cost credit applied to your mortgage interest. It generates immediate income rather than relying on capital growth.
Where to find positive cash flow
Cash-flow-positive properties are more common in regional areas, higher-yield cities (Birmingham, Leeds, Newcastle), and older established markets where prices have not escalated as rapidly as rents. HMOs (houses in multiple occupation), multi-unit blocks, and commercial property often produce stronger cash flows.
FAQFrequently asked Frequently asked questions
Where these figures come from
Property and mortgage figures on this page are drawn from HMRC (Stamp Duty Land Tax), The Bank of England (mortgage-rate data), The FCA (mortgage conduct rules), and HM Land Registry (house-price data).
- Stamp Duty Land Tax (SDLT) rates — GOV.UK — Stamp Duty Land Tax.
- UK mortgage rate & lending data — Bank of England — Mortgage lending statistics.
- FCA mortgage conduct rules — FCA — Mortgages.
- UK House Price Index — GOV.UK — UK House Price Index.
- Rental income & Section 24 mortgage interest relief — GOV.UK — Rental income and tax.
Last checked: April 2026. Rates and thresholds are reviewed against the source of record each November, when annual adjustments for the following tax year are published.
You might also be interested in Borrowing CapacityMax investment loan MortgageLoan repayments CGTSale tax on investment LTVLoan-to-value ratio ROITotal property returns Pay Riseleveraged property investment impact Rate this calculatorQuick answers
£250k property — £1,100/month rent 5.3% gross yield
A £250,000 property let at £1,100/month generates a 5.3% gross yield (£13,200/year). After typical running costs (£3,500–£5,000/year), the net yield is approximately 3.3–3.9%.
| Gross annual rent | £13,200 |
|---|---|
| Gross yield | 5.3% |
| Est. annual running costs | £3,500–£5,000 |
| Net yield estimate | ~3.3–3.9% |
| Loan at 75% LTV | £187,500 |
| Interest at 5% (interest-only) | £9,375/year |
- Raise rent £50/month +£600/year gross
- Letting agent (10–15%) £1,320–£1,980/year
- SDLT surcharge (England & NI) +£12,500 on top of standard bands
- Remortgage risk +1% rate = +£1,875/year interest
£400k property — £1,400/month rent 4.2% gross yield
A £400,000 property let at £1,400/month generates a 4.2% gross yield (£16,800/year) — typical of outer London and commuter-belt lets, where higher prices compress yields.
| Gross annual rent | £16,800 |
|---|---|
| Gross yield | 4.2% |
| Est. annual running costs | £4,500–£7,000 |
| Net yield estimate | ~2.5–3.1% |
| Interest on £300k loan at 5% | £15,000/year |
| Cash flow before tax | Often negative at 75% LTV |
- Section 24 Mortgage interest earns only a 20% tax credit
- ICR check (145% at 5.5%) £16,800 rent supports ~£210k loan
- Capital growth needed Yield alone rarely justifies the price
- Compare Birmingham Same cash buys 5–6.5% gross
Birmingham metro rental yields 5.0–6.5% gross yield
Birmingham offers 5.0–6.5% gross — well above London — with £150k–£250k entry prices and regeneration-driven tenant demand.
| Gross yield range | 5.0–6.5% |
|---|---|
| Net yield range | ~3.5–5.0% |
| Typical entry price | £150k–£250k |
| Rent on a £200k property | £850–£1,000/month |
| Void risk | Low in well-connected postcodes |
| Cash flow at 75% LTV | Often positive |
- Regeneration Big City Plan and HS2 works
- Best areas Near stations and universities
- New supply risk City-centre flats — monitor the pipeline
- Compare Leeds Similar yields, similar demand story
Loss-making rental — UK tax treatment Losses carry forward only
If your rental runs at a loss, UK rules give no offset against salary or other income. The loss is carried forward automatically against future profits of the same property business (HMRC PIM4210). Mortgage interest is not a deductible expense — it earns a 20% basic-rate credit under Section 24.
| Offset against salary? | No — never |
|---|---|
| Loss relief | Carried forward vs future rental profits |
| Mortgage interest | 20% tax credit only (Section 24) |
| Example: £8,000 interest | £1,600 credit — not a £3,200 deduction |
| Higher-rate trap | £2,000 cash profit can mean £2,400 tax |
| From April 2027 | Property income rates rise to 22%/42%/47% |
- Do the after-tax sums Cash flow and taxable profit differ
- Limited company route Full interest deduction, other trade-offs
- Keep records Carried-forward losses go on your return
- Capital growth case A loss-maker must earn it on growth
Net yield — gross yield minus running costs Gross − 1.5–2.5% typical
Net rental yield deducts all ongoing property costs from gross rent. A 5% gross yield typically becomes 3–3.5% net after letting agent fees, insurance, maintenance and void periods.
| Gross yield | Annual rent ÷ property value |
|---|---|
| Net yield | (Rent − costs) ÷ property value |
| Typical annual costs (£250k let) | £3,500–£5,500 |
| Letting agent (full management) | 10–15% of rent |
| Maintenance (1% rule) | £2,500/year on a £250k property |
| Mortgage interest | Not deducted — see cash flow instead |
- Self-manage Saves 10–15% of rent, costs time
- Review insurance annually Landlord cover £150–£400
- Minimise voids One empty month cuts annual rent ~8%
- Leasehold flats Service charge and ground rent bite hardest
City yield comparison — London vs Birmingham 3–3.5% vs 5–6.5%
London gross yields average 3–3.5% because prices are high relative to rents. Birmingham yields 5–6.5% on much lower entry prices. Higher-yield cities often carry lower capital-growth expectations.
| London gross yield | 3.0–3.5% |
|---|---|
| Manchester gross yield | 4.5–6.0% |
| Birmingham gross yield | 5.0–6.5% |
| Leeds gross yield | 5.5–7.0% |
| Edinburgh gross yield | 4.0–5.5% |
| Regional UK gross yield | 6–8%+ |
- Higher yield: more income Positive cash flow more likely
- Lower yield: growth bet London relies on capital growth
- Diversify by city Different yield/growth profiles
- Check local voids High-yield areas can be slower to let
£150,000 property — £1,000/month rent 8.0% gross yield
At £150,000 with £1,000/month rent, the gross yield is 8.0% (£12,000/year) — achievable in parts of the North East, Yorkshire and South Wales.
| Property value | £150,000 |
|---|---|
| Monthly rent | £1,000 |
| Annual rent | £12,000 |
| Gross yield | 8.0% |
| Est. running costs | £2,500–£3,500/year |
| Net yield estimate | ~5.7–6.3% |
- At £850/month rent 6.8% gross — still strong
- Cash flow at 75% LTV, 5% rate ~£3,000+/year positive
- Check the tenant market High yield can mean thin demand
- Older stock Budget for EPC upgrades
£200,000 property — £1,000/month rent 6.0% gross yield
At £200,000 with £1,000/month rent, the gross yield is 6.0% (£12,000/year) — a common profile in Midlands and northern cities.
| Property value | £200,000 |
|---|---|
| Monthly rent | £1,000 |
| Annual rent | £12,000 |
| Gross yield | 6.0% |
| Net yield estimate | ~4.3–4.8% |
| Interest on £150k loan at 5% | £7,500/year |
- Cash flow at 75% LTV ~£1,000–£2,000/year positive
- ICR check (145% at 5.5%) £12,000 rent supports ~£150k loan
- At £900/month rent 5.4% gross
- Letting agent 10–15% if fully managed
£250,000 property — £1,000/month rent 4.8% gross yield
At £250,000 with £1,000/month rent, the gross yield is 4.8% (£12,000/year) — around the UK-wide typical range for a standard let.
| Property value | £250,000 |
|---|---|
| Monthly rent | £1,000 |
| Annual rent | £12,000 |
| Gross yield | 4.8% |
| Net yield estimate | ~3.4–3.8% |
| Interest on £187.5k loan at 5% | £9,375/year |
- Cash flow at 75% LTV Roughly break-even
- Push rent to £1,100 5.3% gross
- 40% deposit instead Cash flow turns clearly positive
- Costs discipline Every £500 saved adds 0.2% net yield
£300,000 property — £1,000/month rent 4.0% gross yield
At £300,000 with £1,000/month rent, the gross yield is 4.0% (£12,000/year). Below roughly 4.5%, most 75% LTV purchases are cash-flow negative at current mortgage rates.
| Property value | £300,000 |
|---|---|
| Monthly rent | £1,000 |
| Annual rent | £12,000 |
| Gross yield | 4.0% |
| Interest on £225k loan at 5% | £11,250/year |
| Cash flow estimate | −£2,000 to −£3,000/year |
- Break-even rent at 75% LTV ~£1,200/month
- Bigger deposit 60% LTV turns it positive
- Section 24 A cash loss can still mean a tax bill
- Growth case Must justify the negative carry
£400,000 property — £1,000/month rent 3.0% gross yield
At £400,000 with £1,000/month rent, the gross yield is only 3.0% — a profile that relies almost entirely on capital growth.
| Property value | £400,000 |
|---|---|
| Monthly rent | £1,000 |
| Annual rent | £12,000 |
| Gross yield | 3.0% |
| Net yield estimate | ~2.1–2.4% |
| Interest on £300k loan at 5% | £15,000/year |
- Cash shortfall at 75% LTV ~£6,000/year
- ICR reality check £12,000 rent supports only ~£150k loan
- Break-even rent ~£1,500/month
- Compare higher-yield cities Same money, two properties
London Zone 1–2 — £500k–£1M+ flats 2.5–3.5% gross
Central London commands the UK's highest prices but its lowest yields — typically 2.5–3.5% gross. At 75% LTV, cash flow is usually negative once mortgage interest is paid.
| Price range | £500k–£1M+ |
|---|---|
| Gross yield | 2.5–3.5% |
| Net yield | 1.5–2.5% |
| Rent on a £600k flat | £1,300–£1,750/month |
| Cash flow at 75% LTV | Usually negative |
| Service charges | Can exceed £3,000/year on flats |
- Strategy is capital growth Income rarely stacks up alone
- ICR caps borrowing Low rent-to-price means a bigger deposit
- Section 24 impact Higher-rate taxpayers hit hardest
- Consider outer boroughs 3.5–4.5% with regeneration upside
London outer boroughs — £300k–£500k 3.5–4.5% gross
Outer London offers better yields of 3.5–4.5% gross at £300k–£500k entry prices. Regeneration areas and Elizabeth line corridors have strong tenant demand.
| Price range | £300k–£500k |
|---|---|
| Gross yield | 3.5–4.5% |
| Net yield | 2.0–3.0% |
| Rent on a £400k property | £1,200–£1,500/month |
| Cash flow | Tight at 75% LTV |
| Tenant profile | Families — longer tenancies |
- Transport links Elizabeth line and Overground corridors
- Longer tenancies Lower void risk than Zone 1
- Growth potential Regeneration boroughs outperform
- Compare commuter towns Similar yield, lower entry price
Manchester city centre — £180k–£280k flats 4.5–5.5% gross
Manchester city-centre flats yield 4.5–5.5% gross at £180k–£280k. Strong graduate retention and corporate demand keep voids low.
| Price range | £180k–£280k |
|---|---|
| Gross yield | 4.5–5.5% |
| Net yield | 3.0–4.0% |
| Rent on a £220k flat | £850–£1,000/month |
| Service charge (new-builds) | £1,500–£3,000/year |
| Void risk | Low — deep rental market |
- New-build premium Older stock often yields better
- Service charges Check before buying a flat
- Rent growth Among the UK's strongest recently
- Compare Salford/Stockport 5–6% at lower entry prices
Greater Manchester — £120k–£220k 5.0–6.0% gross
Outer Greater Manchester (Salford, Stockport, Bolton, Oldham) yields 5.0–6.0% gross with entry prices from around £120k — popular first buy-to-let territory.
| Price range | £120k–£220k |
|---|---|
| Gross yield | 5.0–6.0% |
| Net yield | 3.5–4.5% |
| Rent on a £160k property | £670–£800/month |
| Positive cash flow | Achievable at 75% LTV |
| Stock type | Terraces and semis — lower service costs |
- Check the EPC before buying EPC C standard due by 2030
- Maintenance on older stock Budget more than the 1% rule
- Tenant demand Strong from local employment
- Yields vs city centre Higher, with slower growth
Leeds metro rental yields 5.5–7.0% gross
Leeds yields 5.5–7.0% gross, among the strongest of the major English cities, driven by undersupply and a large student and young-professional base.
| Gross yield | 5.5–7.0% |
|---|---|
| Net yield | ~4.0–5.5% |
| Typical entry price | £130k–£220k |
| Rent on a £180k property | £850–£1,000/month |
| Vacancy | Low — undersupplied market |
| Cash flow | Positive at sensible LTV |
- Student lets Higher yield, higher turnover
- HMO licensing Check council rules first
- Rent growth Undersupply supports increases
- Older stock EPC upgrades may be needed
Edinburgh metro rental yields 4.0–5.5% gross
Edinburgh yields 4.0–5.5% gross with deep tenant demand from students, tourism and professional services. Scottish purchases carry an 8% Additional Dwelling Supplement.
| Gross yield | 4.0–5.5% |
|---|---|
| Net yield | ~2.8–4.0% |
| Typical entry price | £180k–£300k |
| Rent on a £250k flat | £950–£1,150/month |
| ADS on purchase | 8% of the full price (Revenue Scotland) |
| Tenant demand | Very strong |
- LBTT, not SDLT Scotland has its own tax bands
- Tenancy rules differ Scottish private residential tenancies
- Short-let licensing Strict in Edinburgh
- Glasgow alternative Higher yields, lower entry prices
Regional UK — 6–8%+ gross yields Higher yield, higher risk
Parts of north-east England, Yorkshire, Wales and Scotland deliver 6–8%+ gross. Weigh the income against void risk, slower capital growth and lower liquidity.
| Gross yield range | 6–8%+ |
|---|---|
| Capital growth | Variable — location dependent |
| Void risk | Higher than the big cities |
| Liquidity | Slower resale market |
| Entry prices | From under £100k |
| Cash flow | Strong while tenanted |
- Research local demand Employment base and population trend
- Condition surveys matter Cheap stock can hide big bills
- EPC C by 2030 Upgrade costs hit older stock hardest
- Regional hubs University towns balance risk and yield
Break-even — what yield covers the costs? ~5.3% gross at 75% LTV, 5% rate
Break-even is where rent exactly covers running costs plus mortgage interest. On a £250,000 property at 75% LTV and a 5% interest-only rate, that needs about £1,115/month — a 5.3% gross yield.
| Loan (75% LTV on £250k) | £187,500 |
|---|---|
| Interest at 5% | £9,375/year |
| Running costs est. | £4,000/year |
| Total to cover | £13,375/year |
| Break-even rent | ~£1,115/month |
| Required gross yield | ~5.3% |
- At a 4% mortgage rate Break-even falls to ~£960/month
- Cut running costs £1,000 Break-even −£83/month
- Formula (Interest + costs) ÷ value = required yield
- Tax note Break-even cash flow can still be taxable profit
Positive cash flow — rent exceeds all costs Achievable in higher-yield cities
A rental is cash-flow positive when rent exceeds running costs plus mortgage payments. Rental profit — worked out without deducting mortgage interest — is taxed at your marginal rate, with a 20% credit for the interest under Section 24.
| Definition | Rent > all costs incl. mortgage |
|---|---|
| Where | Midlands, the North, Scotland — 5%+ yields |
| Tax on profit (2026-27, rUK) | 20% / 40% / 45% |
| Section 24 note | Interest credit at 20% only |
| From April 2027 | 22% / 42% / 47% on property income |
| Bigger deposits help | 60–70% LTV often turns cash positive |
- HMOs and multi-lets Higher cash flow, more management
- Rate risk Refix before your deal expires
- Reinvest profits Compound into the next deposit
- Scottish taxpayers Different income tax bands apply
£500,000 property — what rent breaks even? Needs ~£1,900/month (4.6% gross)
A £500,000 buy-to-let at 75% LTV carries a £375,000 loan. At 5% interest-only that is £18,750/year interest plus roughly £4,000 running costs — so break-even needs about £1,900/month rent, a 4.6% gross yield.
| Property value | £500,000 |
|---|---|
| Loan (75% LTV) | £375,000 |
| Annual interest at 5% | £18,750 |
| Running costs est. | £4,000/year |
| Total annual costs | £22,750 |
| Break-even rent | ~£1,896/month (4.6% yield) |
- ICR will bite first £1,900/month supports only ~£286k at 145%/5.5%
- SDLT on an additional home £40,000 (£15,000 standard + £25,000 surcharge)
- Bigger deposit needed ICR shortfall means a 43%+ deposit
- Interest-only vs repayment Repayment worsens monthly cash flow
Worked examples
| Inputs | Gross Rental Yield | Note |
|---|---|---|
| 900,000 property let at 850 a week | 1.6% | 4.91% gross, 3.00% net, and negative cash flow after interest |
| The same rent on a 650,000 property | 2.22% | yield is a ratio — the cheaper property yields 6.80% |
| Bought outright, no mortgage | 1.6% | cash flow turns positive the moment interest goes |
FAQFrequently asked questions
What is a good rental yield in the United Kingdom?
A 'good' yield depends on your investment goal. In London, 3–4% gross is typical. In Birmingham and Leeds, 5–7% is achievable. Investors focused on capital growth accept lower yields; those focused on income target higher yields, often in regional or northern cities.
What is the difference between gross and net yield?
Gross yield uses raw rental income. Net yield deducts ongoing costs (management fees, council tax, insurance, maintenance). A 4.5% gross yield may be only 2.5–3% net after costs. Use net yield for genuine return comparisons.
Does a rental loss reduce my tax bill?
Only indirectly, and only over time. In the UK a rental loss cannot be set against your salary — it is carried forward against future profits of the same property business. The Section 24 credit softens the mortgage-interest cost, but the underlying investment must still produce capital growth or positive cash flow to be worthwhile.
How does rental yield affect borrowing capacity?
Lenders count rental income at 80% of gross rent when assessing your borrowing capacity. A £26,000 gross rent becomes £20,800 of income the lender will count. If costs exceed rental income (a loss-making let), the shortfall is treated as a monthly commitment reducing your maximum loan. Sources
The sources behind this calculator
- MoneyHelper — the government-backed guidance on renting and buying
Last checked: September 2026. Duty scales are the state revenue offices' own; they change at each state budget and are verified against the office when they do.