Buy-to-Let Yield & Return Calculator
Calculate the gross yield, net yield, and annual return on a buy-to-let property investment — accounting for mortgage costs, fees, voids, and maintenance.
As an Amazon Associate and CJ Affiliate publisher we earn from qualifying purchases. Prices and availability may vary.
Buy-to-Let Investment Guide
What's the difference between Gross and Net Yield?
Gross yield = (annual rent / purchase price) × 100. A property bought for £250,000 renting at £1,100/month: gross yield = (13,200 / 250,000) × 100 = 5.28%. Net yield deducts all costs: mortgage interest, agent fees (8-15% of rent), maintenance (estimated 0.5-1% of property value annually), insurance (building and landlord liability), letting agent setup fees, and voids (periods without a tenant). A typical net yield is 1.5-2% lower than gross yield. Net yields below 3% rarely justify the risk and effort of being a landlord once void periods and maintenance are factored in.
What's the key thing to understand about Mortgage Interest and Section 24?
Since April 2020, landlords who are higher or additional rate taxpayers can no longer deduct mortgage interest as a business expense. Instead, they receive a 20% tax credit on mortgage interest costs. This significantly reduced the profitability of leveraged buy-to-let for higher-rate taxpayers. Example: £250,000 property, 75% LTV mortgage at 5.5%: annual interest = £187,500 × 5.5% = £10,313. Basic-rate taxpayer: tax on rental profit reduced by 20% of interest (modest impact). Higher-rate taxpayers get no such relief on the interest itself — since 2020, mortgage interest is no longer deductible from rental income before tax, replaced by a 20% tax credit regardless of tax band, which can push some landlords' effective tax rate on rental profit well above their headline rate.
What do I need to know about Additional Costs and Stress Testing?
Regulatory costs for UK landlords: SDLT additional dwelling surcharge (3% on top of standard rate). EPC certificate (minimum rating E required for rental, moving to C by 2028). Gas safety certificate annually. Electrical installation condition report (every 5 years). Legionella risk assessment. Deposit protection. Letting agent setup and management (8-15%/month). Annual tax return / accountant fees. Stress test: can you afford the mortgage if the property is void for 3 months? If rates rise by 2 percentage points, does the rent still cover the higher mortgage payment? Most BTL lenders stress-test at a notional rate several points above the actual pay rate for exactly this reason.
What's the difference between Capital Growth and Yield?
Total return from buy-to-let = rental yield + capital growth. Historically: central London properties have delivered low yields (2-3%) but high capital growth (5-8% annually in good years). Northern England properties offer higher yields (6-8%) but typically lower capital growth. For a cash investor without a mortgage, yield becomes more important. For a leveraged investor, capital growth amplifies returns through leverage — a 5% price rise on a property purchased with a 25% deposit represents a 20% return on the deposit invested, which is why many BTL investors prioritise areas with strong growth prospects over the highest headline yield.