Rental yield calculator
What the property actually returns, once the costs are in the sum.
Gross yield is the figure most often quoted and the least useful on its own. It takes annual rent, divides it by the value of the property, and ignores everything it costs to run.
Net yield is the number that matters. It takes account of the weeks the property stands empty between tenancies and the money that goes out on management, insurance, maintenance, safety certificates, ground rent and service charge before anything reaches you.
Rental yield calculator
What to put in
Property value or purchase price
If you are appraising a purchase, use the price you expect to pay. If you already own the property, use its current value, since that is the capital your return should be measured against.
Annual running costs
Be realistic. Management fees, buildings insurance, gas and electrical safety certificates, an EPC, routine maintenance, and for a leasehold flat the ground rent and service charge. A common mistake is to enter nothing here and conclude the property returns more than it does.
Void allowance
Even a well-let property is empty occasionally. Four per cent is roughly a fortnight a year, which is a reasonable assumption for a property that lets easily. Somewhere with thinner demand may need more.
Annual mortgage interest
This is shown separately because it affects your cash flow rather than the yield the asset itself produces. Two people can own the same property with very different cash flows and identical net yields.
What the calculator does not do
It takes no account of tax, and tax is a significant part of the picture for most landlords. Since the phasing out of full mortgage interest relief, the way finance costs are treated depends on how the property is held, whether personally or through a company, and on your own circumstances.
This calculator is an illustration only. It is not investment, tax or financial advice, and it does not forecast future rent or capital values. Sable and Stone Real Estate is not a tax adviser. Speak to a qualified accountant or tax adviser about your own position before you make an investment decision.
Talk it through
If you would like a view on what a specific property is likely to achieve in rent, and what it is realistically likely to cost to run, we will give you one.