Rental yield calculator
Rental yield measures the income a buy-to-let produces against its value. Gross yield is annual rent as a percentage of the price; net yield takes off running costs; cash-on-cash return divides your profit after mortgage interest by the cash you put in. On a £250,000 property renting at £1,250 a month with £3,000 a year of costs and a 25% deposit at 5.5% interest-only, that is a 6.0% gross yield, 4.8% net, and about a 2.7% return on the cash invested. Free, no email, nothing stored. Most buy-to-let is not regulated by the FCA.
Work out the yield on a rental
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Running costs means letting fees, insurance, maintenance, voids, ground rent and service charges. Not the mortgage.
Gross yield
6.0%
Net yield
4.8%
Return on cash
2.7%
Worked example: £15,000 of annual rent on a £250,000 property is a 6.0% gross yield. After £3,000 of costs the net yield is 4.8%. With a 25% deposit (£62,500) and £10,313 of interest-only mortgage interest, the annual profit is £1,688, a 2.7% return on the cash you put in. Change the figures for your own deal.
Simplified illustration. It assumes an interest-only mortgage (typical for buy-to-let) and excludes stamp duty, purchase costs, tax and capital growth. Return on cash uses the deposit only. Not a quote, not advice, not tax advice. A regulated broker and an accountant can confirm your real figures.
Which number matters most?
Gross yield is the quick comparison figure, useful for lining up properties, but it flatters the reality because it ignores costs. Net yield is closer to the truth of running the property. Cash-on-cash return is the one that tells a mortgaged landlord how hard their own money is working, because it measures profit against the deposit, not the whole price. None of them include capital growth or tax, which is why buy-to-let is a business decision as much as a property one. See how lenders size the loan on the buy-to-let hub.
A good yield still has to pass the stress test
Lenders do not lend on yield alone. They apply a rental cover test (the interest cover ratio, or ICR), checking the rent covers the mortgage interest by a set margin at a stressed rate, and they cap the loan-to-value, commonly around 75%. A strong yield can still fail the stress test at a high loan size, and how you own the property, personal name or a limited company SPV, changes the test. Take tax advice alongside the mortgage advice.
Common questions
What is the difference between gross and net rental yield?
Gross yield is the annual rent as a percentage of the property price, before any costs. Net yield takes off running costs (letting fees, insurance, maintenance, void periods, ground rent and service charges) and expresses the rest as a percentage of the price. Net yield is the more honest figure, because gross ignores everything it actually costs to run a rental.
What is cash-on-cash return, and why does it differ from yield?
Cash-on-cash return is your annual profit after costs and mortgage interest, divided by the cash you actually put in (deposit plus buying costs). Because a mortgage lets you control a whole property with a fraction of its price, the return on your own cash can look very different from the yield on the full value. It is the figure that tells a leveraged landlord how hard their money is working.
What counts as a good rental yield?
It varies by area and property type, and there is no universal threshold. Lower-priced regions and higher-yield property types such as HMOs tend to show higher yields; prime areas often show lower yields but historically stronger capital growth. The point of a yield figure is to compare like with like and to check the numbers work at a stressed mortgage rate, not to hit a magic percentage.
Does a good yield mean the lender will lend?
Not on its own. Buy-to-let lenders apply a rental cover test (often called ICR), checking the rent covers the mortgage interest by a set margin at a stressed rate, and they set a maximum loan-to-value, commonly around 75%. A property can show a healthy yield yet still fail the stress test at a given loan size. See our buy-to-let hub for how lenders size the loan.
Higher-yield strategies come with their own lending: see HMO mortgages and holiday let mortgages.
Founder, MortgageExplained
Adam spent nearly a decade as a mortgage adviser at Just Mortgages, with further experience in commercial finance. He is CeMAP and CF qualified. He built MortgageExplained to do one thing well: explain mortgages in plain English, then introduce you to a regulated broker when you are ready. Every page is written and reviewed by Adam.
Last reviewed: 14 July 2026