Rental yield calculator guide (UK): inputs, assumptions, and worked examples
A UK guide to using the Rental yield calculator: which value to base yield on, how rent/cost inputs work, and 3 worked examples (including net cashflow).
Summary
Rental yield is a way of expressing rent as a percentage of a property’s value. It’s useful for quick comparisons, but it’s only meaningful if you’re consistent about:
- what value you base yield on (purchase cost vs current value), and
- which costs you include (gross vs net, and whether you include mortgage payments).
Use the calculator here.
- Rental yield calculator: /rental-yield/
Key terms (quick definitions)
- Gross yield: annual rent divided by value, before costs. See: Gross yield.
- Net yield: annual rent minus annual costs, divided by value. See: Net yield.
- Service charge: common in leasehold flats and some estates; it’s part of your annual costs. See: Service charge.
- Void period: time with no rent between tenants; often modelled as a cost/assumption. See: Void period.
How it works
The rental yield calculator uses these inputs (in plain English):
1) Choose the base value
You can usually look at yield in two ways:
- Purchase cost: what you paid (and optionally your buying costs).
- Current value: what the property is worth today.
Both are legitimate — they answer different questions.
2) Enter rent
- Monthly rent → the calculator converts this to annual rent (× 12).
3) Enter costs
The calculator lets you include:
- Annual costs (repairs, insurance, service charges, agent fees, safety checks, etc.)
- Optional monthly mortgage payment (converted to an annual cost)
4) Outputs (what you get back)
- Gross yield = annual rent ÷ base value
- Net yield = (annual rent − annual costs total) ÷ base value
- Monthly net cashflow = (monthly rent − monthly costs) after converting annual costs to a monthly equivalent
Net yield and net cashflow can be negative if costs exceed rent — that’s not a bug, it’s a signal.
Worked examples
Example 1: Purchase-cost yield (including buying costs)
Assume:
- Purchase price: £240,000
- Buying costs (stamp duty, legal, etc.): £6,000
- Monthly rent: £1,200 → annual rent £14,400
- Annual costs (non-mortgage): £2,400
- Monthly mortgage payment: £0 (ignore finance for this example)
Base value (purchase cost): (£240,000 + £6,000 = £246,000)
Gross yield:
- (£14,400 ÷ £246,000 = 0.058536…) → 5.85%
Net yield:
- Net rent = (£14,400 - £2,400 = £12,000)
- (£12,000 ÷ £246,000 = 0.048780…) → 4.88%
Example 2: Current-value net yield + net cashflow (including mortgage payment)
Assume:
- Current value: £300,000
- Monthly rent: £1,450 → annual rent £17,400
- Annual costs (non-mortgage): £3,000
- Monthly mortgage payment: £950 → annual mortgage cost £11,400
Annual costs total = (£3,000 + £11,400 = £14,400)
Gross yield:
- (£17,400 ÷ £300,000 = 0.058) → 5.80%
Net yield:
- Net rent = (£17,400 - £14,400 = £3,000)
- (£3,000 ÷ £300,000 = 0.01) → 1.00%
Monthly net cashflow (simplified):
- Monthly “costs” = (£14,400 ÷ 12 = £1,200)
- Net cashflow = (£1,450 - £1,200 = £250/month)
Example 3: When net yield goes negative
Assume:
- Base value: £220,000
- Monthly rent: £900 → annual rent £10,800
- Annual costs total: £12,600
Net rent = (£10,800 - £12,600 = -£1,800)
Net yield:
- (-£1,800 ÷ £220,000 = -0.008181…) → -0.82%
This is a useful outcome: it tells you your assumptions imply the property is cashflow-negative.
Common mistakes
- Using gross yield as if it’s profit (it ignores costs).
- Mixing methods (sometimes basing yield on purchase price, sometimes on current value) without realising.
- Forgetting leasehold/estate costs like Service charge.
- Ignoring voids (a Void period is a cost, even if you “just” lose rent).
- Treating mortgage payments inconsistently (including them sometimes but not always).
- Assuming yield alone answers everything (it ignores capital growth, risk, and effort).
What to do next
- Related guides:
- Related glossary:
- Related calculator: