Annual rent
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Enter the purchase price and monthly rent for the gross yield — annual rent over price — and add the running costs for the net figure that actually compares investments: management, maintenance, insurance, voids, service charges and the rest of the drag the gross number hides.
Yield is also the bridge to borrowing: the rent that drives the yield is the rent lenders stress against the mortgage in the interest coverage ratio — so the calculator's inputs are the same facts that size the loan, as our buy to let pages map.
Gross yield is the headline and the lie: two properties at 6% gross can sit a full point apart net once management (typically 10-15% of rent), maintenance, insurance, voids (budget realistically — a month a year is honest for many stock types), and leasehold charges are loaded. The net calculation is the only one that compares a freehold terrace against a service-charged flat fairly.
Leverage transforms both into return on equity — the deposit-relative figure that mortgaged investors actually earn — which is the further calculation we run on live cases.
Lenders stress the rent against the mortgage at the interest coverage ratio — typically 125% for company borrowers and basic-rate taxpayers, 145% for higher-rate individuals — so the rent that produces your yield simultaneously caps your loan. High-yield stock (HMOs prominently, as our HMO page maps) supports proportionally more borrowing, which is the structural link between the yield strategy and the financing strategy.
The BTL total-to-pay calculator completes the picture from the cost side; together the two frame any investment decision properly.
Context decides: 5-6% gross is solid for standard single lets in much of the country, lower in high-growth areas where capital appreciation carries more of the return, and 8-12% in HMO and multi-let territory with the management intensity that earns it. Net of costs, and relative to your strategy, is the honest reading.
Management fees, maintenance and repairs, landlord insurance, realistic voids, leasehold service charges and ground rents, compliance costs (certificates, licensing where applicable) — everything the gross figure hides. Mortgage costs sit outside yield by convention and inside return-on-equity, which we calculate separately.
Directly — the rent behind the yield is stressed against the loan at the lender’s ICR, so higher-rent stock supports more borrowing per pound of value. The company-versus-personal ICR difference (125% versus 145%) is part of the structure arithmetic our limited company BTL page works through.
They are the two components of total return, weighted differently by strategy and geography — income-led portfolios chase yield, growth-led ones accept less. The honest analysis runs both on your actual targets, which is the conversation behind every BTL case we arrange.