Rental Yield Calculator Widget

Add a rental yield calculator for landlords and property investors. Readers enter the price, monthly rent, running costs and a vacancy allowance and see the gross yield, the net yield and the net income.

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<iframe src="https://a2z.tools/embed/w/rental-yield-calculator" title="Rental Yield Calculator by A2Z Tools" width="100%" height="750" style="border:0;width:100%" loading="lazy" allow="clipboard-write"></iframe>

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How it works

Gross yield is a year's rent divided by the price - the headline figure in property listings. Net yield is more realistic: it takes off the rent lost to empty periods and the yearly running costs, and divides by the price plus one-off purchase costs such as stamp duty and legal fees. Both are before mortgage interest and income tax.

Calculation method

  • R = monthly rent x 12 (annual rent); P = price; B = one-off purchase costs; C = yearly running costs; v = vacancy %
  • Gross yield = R / P x 100
  • Rent collected = R x (1 - v / 100)
  • Net yield = (rent collected - C) / (P + B) x 100
  • Yields are shown to 2 decimals and money to whole currency units; the calculation itself is not rounded

Worked examples

Long let with running costs

Inputs: Price 300,000, rent 1,500 a month, running costs 3,000 a year, vacancy 5%, no purchase costs

Result: Gross yield 6%; rent after vacancy 17,100; net income 14,100 (1,175 a month); net yield 4.7%

18,000 of annual rent less 900 lost to voids and 3,000 of costs leaves 14,100, which is 4.7% of 300,000.

Purchase costs included

Inputs: Price 250,000, rent 1,400 a month, running costs 4,200, vacancy 8%, stamp duty and legal fees 12,000

Result: Gross yield 6.72%; rent after vacancy 15,456; net income 11,256; net yield 4.3%

The 11,256 of net income is divided by 262,000 - the price plus purchase costs - giving 4.296%, shown rounded to 4.3%.

Limitations

  • Mortgage interest, income tax on rent and capital growth are left out, so net yield is not a total return.
  • Running costs are a single yearly figure; one-off repairs such as a new roof or boiler must be averaged in by you.
  • Vacancy is a flat percentage of the year; rent arrears, letting-agent void fees and rent increases during the year are not modelled.

Where publishers use it

  • Buy-to-let listing pages and property portals
  • Letting agents' landlord guides
  • Property-investment blogs comparing areas
  • Short-let and holiday-home articles modelling vacancy
  • HMO and student-let landlords comparing room-by-room rents with a single-family let

Questions

What is a good rental yield?

It depends on the market and the risk. City-centre flats often show lower yields with steadier growth; cheaper areas often show higher yields. Compare net yields, not gross, and compare like with like.

What should running costs include?

Maintenance, insurance, letting or management fees, service charges, ground rent and property tax - everything except mortgage payments and income tax.

How much vacancy should I allow?

Two to four empty weeks a year is about 4% to 8% of the rent. Check the void periods of comparable lets in the same street; holiday lets sit empty far more than long lets.

Why is my net yield so much lower than the advertised yield?

Listings quote gross yield. Taking off 5% vacancy and 3,000 of costs turns a 6% gross yield on a 300,000 flat into 4.7% net, and adding stamp duty or legal fees to the price lowers it further.

What belongs in running costs for a leasehold flat?

Service charge and ground rent paid to the freeholder, buildings insurance if not in the service charge, letting-agent commission (often a share of rent), safety certificates, licensing fees and a repairs allowance. Leave out mortgage payments and income tax.

Is net yield the same as my return on a mortgaged purchase?

No. Net yield assumes a cash purchase. With a mortgage, your return on the deposit (cash-on-cash) depends on the interest rate: borrowing below the net yield raises it, borrowing above it lowers it.

Should I use yield or capital growth to judge a buy-to-let?

Both. Yield is the income return each year; capital growth is the change in the property's value, which is uncertain and only realised on sale. A 4.7% net yield with no growth beats a 3% yield only if the lower-yield area does not appreciate faster.

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A2Z Tools Rental Yield Calculator
https://a2z.tools/embed/rental-yield-calculator

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