Buy-to-Let Yield & Return Calculator

Buy-to-Let Investment Guide

Gross vs 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 an

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 taxpay

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

Capital Growth vs 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