How to work out a buy-to-let yield

If you’re a first-time landlord, how do you know whether a property is a viable opportunity?

The simple answer is you work out the property’s yield. Yield is effectively what you get back. Think of a yield this way: if you open a bank account and deposit £180,000, you’ll look for the interest rate to see how much your money will earn.

When it comes to buy-to-let, your yield is similar. It’s the figure you can expect to generate each year. Yield is expressed as a percentage of the buy-to-let’s value. For example, if you charge your tenant £800 rent a month and you bought the property for £180,000, your yield would be 5.3%. Yields, however, take two forms: gross and net. 

Gross yield explained

A gross yield is before any of your running expenses have been deducted. You can work out your gross yield by:

• Taking the monthly rent and multiplying it by 12

• Dividing the annual rental income by the property’s purchase price

• Multiplying the result by 100 to get your gross yield percentage

Illustrative gross calculation

• £800 monthly rent x 12 = £9,600

• £9,600 ÷ purchase price £180,000 = 0.053

• 0.053 x 100 = 5.3% yield

Net yield explained

Your net yield will show your generated income less the money you have spent on running your buy-to-let. Expenses can include management fees, ground rent, service charges, repairs, replacements and ongoing maintenance. You can work your net yield out by:

• Taking the monthly rent and multiplying by 12

• Deducting your annual expenses

• Dividing this figure by the property’s purchase price

• Multiplying the result by 100 to get your net yield percentage

Illustrative net calculation

• £800 monthly rent x 12 = £9,600

• £9,600 - annual expenses £1,800 = £7,800

• £7,800 ÷ purchase price £180,000 = 0.043

• 0.043 x 100 = 4.3% yield

How about mortgage repayments?

You should not include any mortgage repayment costs when working out your yield. Yields are purely for measuring the income your buy-to-let will generate. It’s a very useful calculation if you want to compare the viability of several buy-to-let options before you make a purchase. You should use your net yield to reevaluate whether certain properties are still financially feasible.

That doesn’t mean mortgage repayments shouldn’t be part of the viability equation. Your total return on investment (ROI) takes into account mortgage costs. You can work out your ROI by

• Taking your gross rental yield 

• Deducting expenses and mortgage costs

• Dividing this figure by your cash input (deposit, stamp duty and fees)

• Multiplying this figure by 100

Illustrative ROI calculation

• Gross rental income of £7,740 – annual mortgage repayments and running expenses = £4,140

• £4,140 ÷ £40,000 cash deposit & stamp duty = 0.1

• 0.1 x 100 = 10% ROI

As with yield, you can work out your ROI as a gross or net figure. The above is gross as it doesn’t take into account any tax you pay on rental revenue. You can work out your net ROI by including any income or corporation tax payments you make.

Why does a good yield and ROI matter?

A good property investment revolves around getting out more money than you put in. You’ll need to buy at the right price and be able to charge a good rent to cover recurring costs, such as service charges, ground rent, mortgage repayments, insurance and your tax bill. 

You should also accrue a comfortable buffer for the unexpected: void periods, major repairs and remortgaging to a higher rate.

What is a good UK yield?

A good yield is usually between 5% and 8% but the higher the better. If you’re a first time landlord, a mortgage lender will look at your yield and expect it to be above 5% as part of their lending criteria. 

Average buy-to-let yields 2026 

According to Zoopla’s latest yield report, the UK’s average gross buy-to-let yield is 5.8% but this percentage varies from region to region. This figure is based on a buy-to-let bought for £270,045 and a rent of £1,301.

The North East is the best region for yields. The area has an average yield of 7.9%, an average monthly rent of £748 and an average house price of £114,098.

Yields in specific towns and cities vary. The best yield is in Sunderland (9.3%), followed by Aberdeen (8.3%) and Burnley (8.2%). At the lower end of the spectrum, the average yield is 5.1% in London, 5% in Oxford and 4.7% in Cambridge.

Let’s work out a yield for you

We can help you work out a gross yield on any property you think might make a good buy-to-let. All we need is the property price and we’ll use our local knowledge to provide the annual rental income. And with a few more details, we can work out your net yield and ROI too. Contact us and we’ll start calculating.