Calculate BTL mortgage, rental yield, ROI, and annual profit for property investments
| Yield Type | Calculation | Good Target |
|---|---|---|
| Gross Yield | (Annual Rent / Property Price) × 100 | 5-8% |
| Net Yield | (Annual Profit / Property Price) × 100 | 3-5% |
| ROI | (Annual Profit / Initial Investment) × 100 | 8-15% |
A gross rental yield of 5-7% is considered good in most UK areas. In London, 3-5% is more typical due to higher property prices. Always consider net yield after expenses.
Since April 2020, you receive a 20% tax credit on mortgage interest instead of deducting it from rental income. This affects higher-rate taxpayers more significantly.
Budget for: mortgage payments, insurance, maintenance (1% of property value annually), management fees (8-12% of rent), void periods, safety certificates, and tax.
BTL can still be profitable with careful property selection, good rental yields, and efficient management. Consider long-term capital growth alongside rental income.