BTL Yield Calculator

A gross yield of 6–8% or above is generally considered strong for UK buy-to-let. Yields below 4% are difficult to make work with mortgage finance once all costs are included. In London, yields are typically 3–5% gross; in northern cities (Manchester, Liverpool, Leeds) 6–9% is achievable. For auction purchases, target at least 7–8% gross to account for refurbishment costs and higher acquisition expenses.

Gross yield is annual rent ÷ purchase price as a percentage — it ignores all costs. Net yield deducts all annual operating costs (mortgage, insurance, management fees, maintenance, void periods) before dividing by purchase price. Net yield is a far more accurate measure of actual returns. A 7% gross yield property might only return 3–4% net once costs are deducted — which could mean negative cashflow with a mortgage.

Yes. Most BTL lenders require the monthly rent to cover at least 125–145% of the monthly mortgage interest at a stressed rate (typically 5.5%). If the rental income does not meet this threshold, the lender will not advance the full loan, or may decline entirely. Always run the stress test before setting your maximum auction bid — an overpriced purchase may be unfundable at BTL rates even if the yield looks attractive.

It depends on your tax position. Since Section 24 removed mortgage interest relief for individual landlords, many higher-rate taxpayers now purchase through a limited company (SPV) to deduct mortgage interest as a business expense and pay corporation tax rather than income tax. However, company mortgages carry higher rates and fees, and extracting profit incurs additional tax. Take specialist landlord tax advice before deciding — the right answer varies significantly by individual circumstance.