Buy-to-Let Yield Calculator
Work out gross yield, net yield, monthly cash flow and cash-on-cash return on a rental property, including 2026/27 stamp duty and mortgage costs.
Annual Income & Cost Breakdown
Stamp Duty & Total Cash Required (2026/27)
SDLT calculated using 2026/27 England & NI residential rates plus the 5% additional-property surcharge (0–£125k: 5%, £125k–£250k: 7%, £250k–£925k: 10%, £925k–£1.5m: 15%, above £1.5m: 17%). Scotland (LBTT/ADS) and Wales (LTT) use different bands — check your own nation’s rates.
Interest-Only vs Repayment Mortgage
5-Year Investment Projection
Estimated Equity = Property Value − Remaining Mortgage. Equity is not the same as profit: the “Illustrative 5-Year Wealth Gain” below represents property equity growth plus cumulative cash flow — it is not a realised return, and it does not deduct the deposit, Stamp Duty or legal/survey costs you originally put in to buy the property (shown separately above under “Total Cash Required”), nor any costs of selling or refinancing.
Illustrative only. Assumes 2% annual rent growth, 3% annual property price growth, insurance and ground rent/service charges remaining unchanged, and the currently selected mortgage payment held fixed for all 5 years — none of these are guaranteed. Mortgage balance and equity are based on the selected mortgage type (interest-only balances do not reduce). Excludes selling costs, remortgaging, income tax and Section 24 mortgage-interest restrictions.
Buy-to-Let Yield Calculator UK 2026/27
Our Buy-to-Let Yield Calculator helps UK landlords and property investors work out gross yield, net yield, monthly cash flow and cash-on-cash return before buying a rental property. Enter the purchase price, expected rent, deposit and running costs to see whether a property stacks up financially, including 2026/27 Stamp Duty Land Tax on additional properties and a side-by-side comparison of interest-only versus repayment mortgages.
What Is Rental Yield and How Is It Calculated?
Rental yield measures the annual income a property generates as a percentage of what it costs. Gross yield is the simplest version: annual rent divided by purchase price. Net yield goes further, deducting running costs such as letting agent fees, maintenance, insurance and void periods before dividing by the purchase price. Net yield gives a far more realistic picture of profitability than the headline gross figure.
| Yield Type | Formula | What It Shows |
|---|---|---|
| Gross Yield | Annual rent ÷ purchase price × 100 | Quick comparison between properties |
| Net Yield | (Annual rent − running costs) ÷ purchase price × 100 | Realistic operating return, before mortgage |
| Cash-on-Cash Return | Net annual profit ÷ total cash invested × 100 | Return on the actual deposit, fees and SDLT you put in |
Buy-to-Let Yield Example
A £200,000 property renting for £1,000 per month produces £12,000 in annual rent. Gross rental yield is therefore £12,000 ÷ £200,000 × 100 = 6%. If running costs (letting fees, maintenance, insurance and a few weeks of void periods) come to £2,400 a year, net yield falls to £9,600 ÷ £200,000 × 100 = 4.8% — before any mortgage costs are deducted. Plug your own numbers into the calculator above to see the full breakdown, including mortgage payments and cash-on-cash return.
Gross Yield vs Cash-on-Cash Return
Gross yield and cash-on-cash return answer different questions, and conflating them is a common mistake. Gross yield measures how hard the property works relative to its full purchase price, regardless of how it’s financed. Cash-on-cash return measures how hard your money works — the deposit, stamp duty and purchase costs you actually paid out of pocket, after mortgage payments are deducted from rental income.
Because buy-to-let is usually leveraged with a mortgage, cash-on-cash return is often substantially higher (or lower) than gross yield on the same property. A property with a modest 5% gross yield can still deliver a strong double-digit cash-on-cash return if it’s financed with a 75% mortgage and cash flow is healthy — or it can turn cash-flow negative despite a headline yield that looks perfectly respectable. Use gross yield to shortlist properties quickly, then use net yield and cash-on-cash return to decide whether a specific deal is actually worth doing.
How to Use the Buy-to-Let Yield Calculator
- Enter the property price and expected monthly rent. Use a realistic rent based on comparable local listings, not an optimistic figure.
- Set your deposit percentage using the slider, or pick a common LTV preset (60–80% loan-to-value is typical for buy-to-let).
- Choose interest-only or capital & repayment and enter your mortgage rate. Interest-only mortgages are commonly used by buy-to-let investors because the lower monthly payments can improve cash flow.
- Add running costs: letting agent fees, maintenance allowance, insurance, ground rent/service charge and expected void weeks per year.
- Enter purchase costs (legals, survey, etc.) and select your buyer type so Stamp Duty is calculated correctly.
- Click Calculate Yield for an instant breakdown, stamp duty figure, mortgage comparison and 5-year projection.
What Is a Good Rental Yield in the UK in 2026?
The UK average gross rental yield sits at roughly 5.8% to 7.2% depending on the data source and quarter, having risen as house price growth has cooled while rents kept climbing. As a rule of thumb, 5–8% gross is considered good, 8%+ is excellent (typically found in Northern cities and HMOs), and anything under 4% is below average. In London and the South East, lower yields of 4–5% are often accepted because investors are relying more on capital growth than rental income.
| Gross Yield | Rating | Typical Locations |
|---|---|---|
| Under 4% | Below average | Prime Central London, parts of the South East |
| 4% – 5% | Acceptable (capital-growth focused) | London, commuter belt |
| 5% – 8% | Good | Most UK regional cities and towns |
| 8%+ | Excellent | Northern hotspots, HMOs, student lets |
Costs That Reduce Your Buy-to-Let Yield
- Void periods: even 2–4 weeks of vacancy a year meaningfully dents annual income — the calculator lets you model this directly.
- Letting agent fees: typically 0% for self-managed, 8–12% for let-only or rent-collection services, and 12–18% for full management.
- Maintenance and repairs: a common rule of thumb is to budget a 10–15% allowance based on annual rent, especially on older properties. This is a fixed cost of owning the property, so unlike letting agent fees it isn’t reduced during void periods.
- Mortgage interest: buy-to-let mortgage rates currently range from around 3.7% (best 2-year fixes at 75% LTV) to 5.5%+ depending on lender, LTV and product fees.
- Section 24 tax rules: individual landlords can no longer deduct full mortgage interest from rental income for tax purposes — only a 20% tax credit applies, which increases effective tax for higher-rate taxpayers.
- Ground rent and service charges: relevant mainly to leasehold flats, and can materially reduce net yield if not accounted for.
Buy-to-Let Stamp Duty in 2026/27
In England and Northern Ireland, buy-to-let and second-home purchases attract standard SDLT rates plus a 5% additional-property surcharge on every band. Non-UK residents pay a further 2% surcharge on top. Scotland applies its own Additional Dwelling Supplement (ADS) and Wales uses separate Land Transaction Tax (LTT) bands for additional properties.
| Portion of Price | Standard Rate | Buy-to-Let / Additional Property Rate |
|---|---|---|
| £0 – £125,000 | 0% | 5% |
| £125,001 – £250,000 | 2% | 7% |
| £250,001 – £925,000 | 5% | 10% |
| £925,001 – £1,500,000 | 10% | 15% |
| Above £1,500,000 | 12% | 17% |
England & Northern Ireland rates. Non-UK residents add a further 2% on top of these figures. Always confirm with your solicitor or HMRC’s official calculator before completion.
Tips to Improve Your Buy-to-Let Returns
- Compare gross yield across several properties first to shortlist quickly, then use net yield and cash-on-cash return to make the final decision.
- Shop around for buy-to-let mortgage rates and remortgage promptly at the end of any fixed term — slipping onto a lender’s standard variable rate can turn a profitable property cash-flow negative almost overnight.
- Budget realistically for voids and maintenance rather than assuming 52 weeks of rent a year with no repairs.
- Consider whether purchasing through a limited company suits your tax position, particularly for higher-rate taxpayers affected by Section 24.
- Factor Stamp Duty and purchase costs into your total cash invested when judging return — cash-on-cash return is usually a better decision-making metric than gross yield alone.
Frequently Asked Questions
What is a good rental yield for a buy-to-let property?
In the UK, a gross yield of 5% to 8% is generally considered good, with 8%+ seen as excellent and typically found in Northern cities, HMOs or student lets. The current UK average sits at around 5.8% to 7.2% gross.
What is the difference between gross yield and net yield?
Gross yield only compares annual rent to purchase price. Net yield deducts running costs such as letting agent fees, maintenance, insurance and void periods first, giving a more realistic picture of actual profitability. Net yield is typically 2 to 3 percentage points lower than gross yield.
How much stamp duty do I pay on a buy-to-let property in 2026/27?
Buy-to-let purchases in England and Northern Ireland pay standard SDLT rates plus a 5% additional-property surcharge on every band. For example, a £250,000 buy-to-let would pay 5% on the first £125,000 and 7% on the remaining £125,000. Non-UK residents pay a further 2% on top.
Should I choose an interest-only or repayment buy-to-let mortgage?
Interest-only mortgages are commonly used by buy-to-let investors because the lower monthly payments can improve cash flow, with the loan typically refinanced or the property sold at the end of the term rather than paid off. Repayment mortgages build equity over time but reduce monthly cash flow. The calculator compares both side by side, including estimated mortgage balance and equity in the 5-year projection.
What is cash-on-cash return and why does it matter?
Cash-on-cash return measures net annual profit against the actual cash you put in, deposit, stamp duty and purchase costs, rather than the full property value. Because buy-to-let is usually leveraged with a mortgage, cash-on-cash return is often a better decision-making metric than yield alone, since it reflects your real return on the money invested.
How much should I budget for maintenance and void periods?
A common rule of thumb is to budget 10% to 15% of annual rental income for maintenance and repairs, and to assume 2 to 4 weeks of void periods per year even on well-managed properties. Older properties, HMOs and student lets often need higher allowances.
What deposit do I need for a buy-to-let mortgage?
Most buy-to-let mortgages require a deposit of 25% to 40% of the purchase price, higher than a typical residential mortgage. Some lenders offer 80% LTV (20% deposit) products, though rates are usually less competitive than at 75% LTV or below.
Are buy-to-let mortgage interest payments tax-deductible?
Individual landlords can no longer deduct mortgage interest in full from rental income for tax purposes. Instead, a 20% tax credit applies to finance costs under Section 24 rules, which can significantly increase the effective tax bill for higher and additional-rate taxpayers. Limited company landlords are not subject to this restriction. Consult an accountant for advice specific to your situation.
What letting agent fees should I budget for?
Self-managed properties have no agent fee. Let-only or rent-collection services typically charge around 8% to 12% of rent, while full management (including tenant-find, inspections and maintenance coordination) typically costs 12% to 18% of rent.
Does the calculator account for income tax on rental profit?
No. The calculator shows pre-tax cash flow and yield figures. Rental profit is subject to income tax at your marginal rate (after the Section 24 restriction on mortgage interest relief), so your actual after-tax return will be lower. Speak to an accountant or use HMRC’s guidance for a precise tax calculation.
How accurate is the 5-year projection?
The 5-year projection uses illustrative assumptions of 2% annual rent growth and 3% annual property price growth, with insurance, ground rent and the mortgage payment held constant. These are broadly in line with recent UK trends but are not guaranteed and will vary significantly by location, property type and wider market conditions. The “Illustrative 5-Year Wealth Gain” figure is equity growth plus cumulative cash flow — it does not deduct your original Stamp Duty and purchase costs, so it is not the same as a realised return on investment.