TL;DR
Compare rent with finance and running costs
The calculator estimates gross yield, a simplified net yield and monthly cash flow after an illustrative repayment mortgage and entered monthly costs.
It is not a lender stress test, property valuation, investment recommendation or tax calculation. Allow for voids, repairs, management, compliance, insurance and tax.
Calculator / tool
Set your figures and see the estimate
Gross yield, net yield and monthly cash flow
Gross yield compares annual rent with property value before costs. Net yield should deduct relevant running costs, but this calculator includes only the monthly cost entered by the user. Cash flow is the rent left after the modelled payment and entered costs.
- Gross yield does not show financing or running costs.
- Net yield depends on which costs are included.
- Cash flow can change after a rate or rent change.
- A positive month does not guarantee a profitable investment.
Mortgage assumptions and property running costs
The mortgage output uses a repayment calculation, while many BTL products are interest-only. Real costs can include void periods, agent fees, repairs, safety checks, licensing, service charge, ground rent and buildings insurance.
Enter property running costs only in “Monthly costs”. Do not include mortgage payments: the calculator deducts its modelled repayment separately when calculating cash flow. Divide annual expenses and expected annual rent lost during empty periods by 12 to create monthly allowances. Include lost rent either as a cost allowance or by reducing the rent input, not both. The simplified net yield is before mortgage payments and tax.
Tax and ownership structure are not included
Personal ownership and a limited company can have different mortgage, accounting and tax consequences. The calculator does not model income tax, corporation tax, finance-cost treatment, Capital Gains Tax or purchase taxes.
Example Buy to Let scenario
For a £250,000 property with a £62,500 deposit, the loan is £187,500. At an illustrative 5.5% annual interest rate over 25 years on a capital-and-interest repayment basis, the monthly payment is approximately £1,151.41. With £1,200 monthly rent and £150 entered running costs, gross yield is 5.76%, simplified net yield before finance and tax is 5.04%, and monthly cash flow is approximately −£101.41 before tax. This shows why a positive yield does not necessarily mean positive cash flow. Include realistic allowances for empty periods and repairs in your costs. The interest rate is an example, not a product quote.
- Property value
- £250,000
- Deposit
- £62,500
- Monthly rent
- £1,200
- Entered monthly costs
- £150
Frequently asked questions
What is a good rental yield?
There is no universal target because location, risk, finance and running costs differ. Compare gross and properly calculated net yield with realistic cash flow and your investment objectives.
What is the difference between gross and net yield?
Gross yield is annual rent divided by the property value, expressed as a percentage. Net yield deducts specified costs first. In this calculator, the figure after costs deducts only the monthly expenses you enter; it excludes mortgage payments and tax, so it is not your final take-home return.
Does the calculator include void periods and repairs?
Yes, if you allow for them in your inputs. Convert expected repair costs to a monthly allowance and add it to costs; account for lost rent either through a monthly cost allowance or by reducing the rent input, not both. Unexpected repairs and longer voids can still make the real outcome worse.
Does the calculator include Buy to Let tax?
No. Tax depends on ownership, income and circumstances. Ask a qualified accountant or tax adviser rather than relying on a yield calculator.
Is limited-company ownership better?
Not automatically. Mortgage pricing, fees, accounting, tax, extracting profit and future plans all matter. Obtain mortgage and tax advice before choosing a structure.
Will a lender use this cash-flow result?
Not necessarily. Buy to Let lenders commonly test whether expected rent covers mortgage interest at a specified stress rate, using an Interest Coverage Ratio (ICR). That test is different from your monthly cash-flow estimate, and the required ratio and rate vary by lender, product, applicant and property.