How to Use the Buy-to-Let Yield Calculator

This free UK calculator estimates how a rental purchase performs before you commit. Enter price, rent, deposit and running costs to see gross yield, net yield, monthly cash flow, the extra stamp duty on an additional dwelling, and whether the rent covers a lender-style stress test.

Step-by-Step Guide

1. Enter the property and rent

Purchase price: the agreed or target price, not the valuation.
Monthly rent: realistic achieved rent, not an optimistic listing figure.
Voids: empty months per year. Half a month is a light planning assumption; one month is more conservative.

2. Set stamp duty and cash in

Jurisdiction: England & Northern Ireland use SDLT, Scotland uses LBTT plus an 8% Additional Dwelling Supplement on the whole price, and Wales uses a separate higher-rate LTT table.
Buyer type: additional property / buy-to-let is the default. Switch to main residence only to compare what the same purchase would cost without the surcharge.
Non-UK resident: adds a further 2% SDLT surcharge in England & NI. Scotland and Wales do not levy this extra layer.
Deposit, fees and refurb: these plus duty are the cash you need at completion, which is also the denominator for cash-on-cash return.

3. Configure the mortgage and stress test

Most buy-to-let loans are interest-only. Lenders do not test affordability at the pay rate alone. They apply a stress rate (often the higher of 5.5% or pay rate + 2%) and require rent to cover that notional interest by an Interest Coverage Ratio (ICR):

ICR = annual rent ÷ (loan × stress rate)

125% is typical for basic-rate taxpayers and limited-company borrowers.
145% is typical for higher-rate taxpayers borrowing in a personal name.
165% is a conservative additional-rate / specialist-lender planning figure.

4. Add honest running costs

Net yield here is pre-tax and excludes mortgage interest, so cash and mortgaged buyers can be compared on the same operating number:

Net yield = (effective rent − operating costs) ÷ purchase price

Agent fees are applied to rent after voids. Maintenance defaults to 1% of purchase price, a common reserve rule of thumb.

5. Read the two charts

Annual cash-flow stack: walks from gross rent down through voids, costs and the actual mortgage payment to leftover cash.
Gross vs net vs rent: shows how gross yield, net yield and cash-on-cash move if rent is 20% lower or higher than the figure you entered.

Common Scenarios & Examples

Scenario: £250,000 terraced house, higher-rate taxpayer

Goal: see whether a standard 75% LTV deal clears a 145% ICR test after the additional-property stamp duty.

Leave jurisdiction as England & Northern Ireland and buyer type as additional property.
Purchase price £250,000, monthly rent £1,200, voids 0.5 months.
Deposit 25%, product rate 5.5%, interest-only, stress rate 5.5%, ICR 145%.
Keep the default running costs (10% agent, 1% maintenance, £300 insurance, £200 other).

Approximate results:

Gross yield ≈ 5.76% | Net yield ≈ 3.8%
SDLT ≈ £15,000, of which surcharge ≈ £12,500
Cash to complete ≈ £80,000 (deposit + duty + fees)
ICR ≈ 140% — short of a 145% personal-name test, so required rent is about £1,246

The same rent often passes a 125% Ltd Co / basic-rate test. That is why the matrix under the tables is worth checking before you change structure.

Scenario: same property bought with cash

Goal: separate operating yield from gearing.

Set deposit to 100% (loan becomes £0).
Compare net yield with the mortgaged cash-on-cash figure from the first scenario.

What changes:

Gross and net yield are unchanged because they are measured against purchase price, not cash invested. Monthly cash flow turns positive because there is no mortgage payment. Cash-on-cash falls because the denominator is now the full price plus duty and fees. The stress test is marked N/A — there is no loan to cover.

Using the stamp duty comparison

Goal: isolate the extra cost of buying to let rather than as a main home.

On a £250,000 England & NI purchase the additional-property bill is £15,000 against £2,500 as a main residence — an extra £12,500.
The same price in Scotland with ADS is about £22,100 total (standard LBTT £2,100 + 8% × £250,000).
In Wales the higher-rate LTT table on £250,000 is about £14,950, versus about £1,500 on the main-residence table.

Disclaimer & Limitations

Not professional advice: This calculator is an estimation and education tool. It is not financial, mortgage, tax or legal advice. Lender criteria, product rates and tax rules change. Confirm figures with a qualified adviser and the relevant revenue authority before you exchange.

Stamp duty assumptions: England & NI use residential SDLT bands from 1 April 2025 plus the 5% additional-dwelling surcharge (from 31 October 2024) and the optional 2% non-resident surcharge. Scotland uses residential LBTT plus an 8% Additional Dwelling Supplement on the whole price where the purchase is £40,000 or more. Wales uses the main LTT table or the higher residential table (from 11 December 2024). First-time buyer relief is not applied because it does not apply to buy-to-let. Replacement-of-main-residence refunds, multiple dwellings relief, mixed-use and corporate 15% slab regimes are out of scope.

Stress-test assumptions: Coverage is modelled on interest-only interest at the stress rate you enter. That matches common PRA SS13/16 practice, but individual lenders set their own floors, 5-year-fix carve-outs, top-slicing rules and HMO overlays.

Yield assumptions: Net yield is pre-tax and excludes mortgage interest. It does not model Section 24 finance-cost restriction, income tax, corporation tax, National Insurance, inflation or capital growth. Actual voids, repairs and agent terms will differ.

Bug Reports and Suggested Improvements

Please email all suggestions for improvements and any bug reports to: buytoletcalc@personalfinances.me, thank you.

Buy-to-Let Yield Calculator – UK Rental Purchase Tool

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