Mortgages & property
Buy-to-let yield calculator
Yield is the headline that sellers quote — but the figure that matters is what hits your bank account after voids, agent fees, maintenance and the mortgage. This calculator shows all of them, plus the interest-cover ratio your lender will care about.
- Gross yield
- 6.55%
- Net yield
- 5.10%
- Cash-on-cash return
- 6.20%
| Annual rent at full occupancy | £14,400 |
|---|---|
| Void allowance | −£831 |
| Operating costs (agent + maintenance + insurance + ground/service) | −£2,357 |
| Net operating incomeBefore mortgage and tax. | £11,212 |
| Annual mortgage cost | −£7,800 |
| Annual cashflow before tax | £3,412 |
| Interest cover ratioLenders typically require 125–145%. | 185% |
| Cashflow per month before tax | £284.36 |
Yields here are before tax. Buy-to-let property is subject to a 5% Stamp Duty surcharge in England and Northern Ireland and full-rate Income Tax on rental profit. Mortgage interest is given a 20% tax credit rather than being deductible — net cashflow for higher-rate taxpayers can therefore look meaningfully worse than the cashflow figure shown here.
How it works
- Gross yield is annual rent at full occupancy divided by the property price — useful for screening but ignores all costs.
- Net yield deducts voids, letting-agent fees, maintenance, insurance and any ground rent or service charge.
- Cashflow then subtracts the annual mortgage payment. Cash-on-cash return divides cashflow by the cash you actually put in (deposit plus fees).
- Interest cover ratio (ICR) is rent ÷ mortgage interest, expressed as a percentage. Lenders typically require 125% for basic-rate landlords and 145% for higher-rate.
Common questions
- Should I buy through a limited company?
- For higher-rate taxpayers buying with a mortgage, a limited company often leaves more after tax — full interest deductibility and 25% corporation tax can beat individual ownership. Setup, accountancy and limited-company mortgage rates cost more, so model it carefully.
- What about Section 24 and mortgage interest?
- Section 24 phased out full mortgage-interest deductibility for individual landlords between 2017 and 2020. You now get only a 20% basic-rate tax credit on interest, regardless of your tax band.
- How much should I budget for maintenance?
- A common rule of thumb is 10–15% of annual rent or 1% of the property value per year. Older properties and HMOs typically need more; new-builds less in the early years.