Buy to Let Yield Explained: How to Calculate Gross and Net Yield

Buy-to-let yield is the rent a property earns in a year, shown as a percentage of what it cost. Gross yield is annual rent divided by the purchase price. Net yield subtracts running costs first, so it is always lower and far more useful. Using the latest official averages, a typical home in England rents for roughly 6% of its price each year before any costs, but once you count purchase tax, fees, service charges and empty weeks, a 6% headline can easily shrink to around 4%. This guide shows you how to work out both numbers for a real UK property.

Gross yield vs net yield

Agents and listings usually quote gross yield because it looks better. Treat it as a filter, not an answer.

Step 1: Work out gross yield

Take the monthly rent you can realistically achieve, multiply by 12, divide by the asking price, and multiply by 100.

Example: a flat in England priced at £250,000 that would rent for £1,300 a month.

£1,300 × 12 = £15,600 a year. £15,600 ÷ £250,000 = 6.24% gross yield.

Base the rent on comparable homes that have actually let nearby, not on the highest advert you can find. Our guide on how much rent to charge walks through how to find realistic comparables.

Step 2: Add the real purchase cost

The price is not what you pay. In England and Northern Ireland, buyers pay Stamp Duty Land Tax (SDLT). Scotland and Wales have their own taxes (Land and Buildings Transaction Tax and Land Transaction Tax), so check the rules where the property is.

According to GOV.UK, the standard residential SDLT bands are:

GOV.UK states that you will usually pay 5% on top of the standard rates if buying a new residential property means you will own more than one. Most buy-to-let purchases fall into this category.

For the £250,000 flat, that means 5% on the first £125,000 (£6,250) plus 7% on the next £125,000 (£8,750): £15,000 in SDLT. Add legal fees and a survey (we assume £3,000 in this example) and the total cost becomes £268,000.

Step 3: List every running cost

These are the costs most often left out of a yield calculation. The figures below are illustrative assumptions for the example flat, not market averages. Replace them with real quotes for the property you are looking at.

Step 4: Work out net yield

Annual rent £15,600 minus running costs £5,040 leaves £10,560.

£10,560 ÷ £268,000 total cost = 3.94% net yield.

The same flat that was marketed at 6.24% returns under 4% once the real costs are in. That does not make it a bad property. It means you now know what you are actually comparing.

Note that net yield, as calculated here, leaves out mortgage payments. If you borrow, interest comes out of what is left, and your return on the cash you put in is a different measure. Our guide to cash-on-cash return explains how to calculate it.

What do UK yields look like right now?

There is no single official "UK yield" figure, but you can get a rough sense of the ratio between rents and prices from government statistics. The Office for National Statistics reported in October 2026 that average monthly private rent was £1,466 in England, £2,338 in London and £848 in Wales. HM Land Registry's UK House Price Index for August 2026 put average prices at £293,000 in England, £554,000 in London and £216,000 in Wales.

Treat these as a sense check only. The rent and price averages cover different mixes of homes, and they are gross figures before any costs. Yields on individual streets can be very different.

Tax affects what you keep

Yield is calculated before income tax. For individual landlords, HMRC guidance explains that tax relief on residential finance costs such as mortgage interest is restricted to the basic rate of Income Tax, fully in place since 6 April 2020. Depending on your tax position, this can make a large difference to what you keep. Tax treatment depends on your circumstances, so speak to a qualified tax adviser before relying on any figure.

In England, the Renters' Rights Act is also changing how tenancies work, which can affect costs and timelines for landlords. See our summary of what landlords need to know about the Renters' Rights Act.

Buy-to-let yield checklist

• Confirm achievable rent from homes that have actually let nearby
• Calculate gross yield to filter listings quickly
• Work out the purchase tax for the nation the property is in, including any additional property rate
• Add legal fees, survey and any immediate repairs to the total cost
• Get real figures for service charge, ground rent, insurance and agent fees
• Allow for empty weeks and ongoing maintenance
• Calculate net yield on total cost, not on price
• Run the numbers again with mortgage costs to see your cash return
• Check how current tenancy rules affect your plans

For a broader framework, see our step-by-step guide on how to analyze a rental property.

Sources: ONS private rent and house prices, October 2026, HM Land Registry UK House Price Index for August 2026, GOV.UK SDLT residential rates, GOV.UK Stamp Duty Land Tax overview, HMRC tax relief for residential landlords.

Do it with Blurben

Looking at a buy-to-let listing and not sure the numbers add up? Send it to Blurben on WhatsApp or iMessage. Blurben is an AI real-estate companion that can help you work through the yield, list the costs to check, and plan your next questions, from finding the place through the agreement to connecting the local services you will need.

This article is general information, not financial, tax or investment advice. Tax rules and rates can change; check the latest GOV.UK guidance or speak with a qualified adviser before acting.