KerbioGross yield, net yield and return on cash
Annual rent divided by the price. Quick for comparing listings, but it ignores every cost.
Rent after empty weeks and running costs, divided by everything you spend to buy. Closer to what you keep.
Profit after mortgage interest, divided by the cash you put in. The figure that shows the effect of borrowing.
Not sure what the rent should be? The LHA rates by postcode show the most housing benefit will pay in every area of England, a useful floor for rent. The yield ranking lists the postcode districts where LHA rents are highest against what houses actually sold for.
Questions
How do you calculate rental yield?
Gross yield is the annual rent divided by the purchase price, times 100. A £150,000 house let at £900 a month has a gross yield of 7.2%. Net yield takes off running costs (letting fees, insurance, maintenance, empty months) and divides by the total cost including stamp duty, fees and any refurbishment.
What is a good rental yield in the UK?
Many investors look for a gross yield of 6% to 8% for a single let, and higher for HMOs, but it depends on the area, the property and your plan. High yields often come with lower growth or more management; compare against local rents and the Local Housing Allowance.
What is the difference between gross and net yield?
Gross yield ignores costs; net yield includes them. Net is the better guide to what you actually keep, and it is typically 1.5 to 3 percentage points lower than gross.
What is return on cash invested?
Your annual profit after mortgage interest and costs, divided by the cash you actually put in (deposit, stamp duty, fees and refurbishment). It shows how hard your own money is working when you borrow.
Does this include tax?
No. Income tax on rental profit depends on your own situation, and since Section 24 individual landlords can't deduct mortgage interest as an expense; they get a 20% tax credit instead. Speak to an accountant.
Your maximum offer, and every option side by side
The Kerbio Buy-to-Let Calculator works out the most you can pay to hit your target cash flow and still pass the lender's rent test. Then try a lower rate, more refurb or a different rent in up to four options next to your deal, and see which wins. Tax in your own name or a company included.
See the spreadsheet, £19
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About these calculators
Free, with no sign-up, made by Kerbio, a small independent UK tool for property investors. Nothing you type leaves your browser. Figures are indicative and this is general information, not financial or tax advice.
We also make a Chrome extension that shows sold prices, LHA, licensing and Article 4 on every Rightmove, Zoopla and OnTheMarket listing.
See the extension
Stamp duty uses England and Northern Ireland residential rates from 1 April 2025, with the 5% surcharge on additional properties from 31 October 2024 (GOV.UK). Mortgage is interest-only on the price less deposit. Indicative only; not financial or tax advice.