Buy-to-Let Yield & Profit Calculator
Calculate gross yield, net yield, and monthly cash flow for UK buy-to-let properties — including mortgage interest, management fees, and the Section 24 tax restriction.
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Buy-to-Let Guide 2024
What's the difference between Gross and Net Yield?
Gross yield = (annual rent / property value) × 100. Quick first filter — but ignores all costs. Example: £200k property, £1,100 monthly rent. Gross yield = £13,200 / £200,000 = 6.6%. Healthy gross yield bands: northern UK and Wales: 7-10% achievable. Midlands: 5-7%. South East: 4-6%. Central London: 3-5%. Net yield = ((annual rent − annual costs) / property value) × 100. Costs include: management, maintenance, insurance, ground rent, service charges. Net yield typically runs 2-3 percentage points below gross yield once all costs are accounted for.
What's the key thing to understand about Section 24 — The Mortgage Tax Restriction?
Before 2017: BTL mortgage interest was fully deductible from rental income. After Section 24 (phased 2017-2020): mortgage interest no longer deductible. Instead, 20% tax credit on mortgage interest. Brutal impact for higher-rate taxpayers: 100% of rent counted as income (after non-mortgage costs). Only 20% credit on mortgage interest. Effective tax rate on rent: up to 75% in extreme cases. Limited company structure: limited companies still get full mortgage interest deduction. Many higher-rate landlords in high-mortgage, lower-yield areas have moved properties into limited companies for this reason, though doing so triggers capital gains tax and stamp duty on the transfer, so it rarely makes sense for a single existing property.
What's the key thing to understand about Other Costs to Plan For?
Letting agent fees: full management 10-15% of rent. Tenant find only: typically 1 month's rent. Maintenance: rule of thumb 10% of rent for general maintenance. New roof, boiler replacement, big repairs increase this significantly. Void periods: assume 1 month per year unoccupied. Particularly in higher-yield areas with more tenant turnover. Service charges and ground rent: flats only. Can be £1,000-3,000/year. Cladding-affected buildings can have catastrophic service charges. Insurance: £200-500/year for landlord buildings cover, more for high-value or higher-risk properties.
What do I need to know about Current Market Pressures?
Significant headwinds since 2020: mortgage rates rose from ~2% to 5%+. Section 24 fully active. Renters Reform Bill (when enacted) — abolishes Section 21 'no-fault' evictions. Energy efficiency: properties below EPC C may not be lettable from 2028 (proposed). Retrofit costs £5,000-25,000 for older properties. Capital growth: London essentially flat since 2016. Northern cities (Manchester, Leeds, Liverpool) have outperformed. BTL profitability: many older portfolios are barely cash-flow positive once mortgage interest, Section 24 tax changes, and rising compliance costs (EPC requirements, safety certificates) are all accounted for.