Rental Yield Calculator United Kingdom 2026-27
Evaluating an investment property? See what it actually returns.
Calculate gross and net rental yield on investment property. Includes vacancy, management fees, mortgage cash flow analysis, and depreciation.
Gross yield only — deduct management fees, rates, insurance, and maintenance for net yield.
Select the question that matches where you are right now.
Rental yield measures the annual rental income as a percentage of the property's purchase price. Gross yield uses the raw rent figure; net yield deducts ongoing costs.
Annual rent ÷ property value × 100. A £300,000 property renting for £1,200/month produces: (£1,200 × 12) ÷ £300,000 × 100 = 4.8% gross yield.
In London, 3–3.5% gross is typical. In Birmingham and Leeds, 5–7% is achievable. Regional areas often yield 6–8%+. Higher yields typically come with higher vacancy risk or lower capital growth.
High-yield properties tend to have lower capital growth and vice versa. The optimal investment depends on your goal: income (yield) or long-term wealth accumulation (capital growth).
Net yield accounts for all ongoing costs. A 5% gross yield property may only return 3.5% net after expenses.
Property management fees (8–12% of rent), council tax (£1,200–£2,500/year), service charges, landlord insurance (£300–£600/year), maintenance/repairs (budget 1% of value/year), and void periods.
(Annual rent − annual costs) ÷ property value × 100. On a £300k property with £14,400 rent and £4,500 costs: (£14,400 − £4,500) ÷ £300,000 = 3.3% net.
Net yield as commonly calculated does not deduct mortgage interest — that is captured in cash flow analysis. Net yield is a property performance metric independent of financing.
Rental yields vary significantly across major UK cities.
Gross yields typically 3–3.5% in central zones. Outer borough flats may yield 3.5–4.5%. High property values compress yields despite strong rents.
Strong yields: 4.5–5.5% typical in city centre. Some outer areas and growth corridors reach 5.5–6.5%.
Strong performer: 5–7% gross yields across many areas. Lower entry prices with competitive rents. Edinburgh also in this range.
After calculating yield, these calculators help complete your investment analysis.
Include capital growth alongside rental yield for a complete investment return picture.
ROI calculator →Calculate the maximum investment loan your income can support.
Borrowing capacity calculator →Model the capital gains tax on your investment property when you sell.
CGT calculator →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.
Rental 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 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.
Frequently asked Frequently 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.
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.