The rental return
Gross yield
6.00%Annual rent ÷ purchase priceNet yield
3.98%After running costs, voids and stamp duty£1,500 a month on a £300,000 property gives a 6.00% gross yield, and a 3.98% net yield after running costs, void weeks and stamp duty.
Where the rent goes
- Annual rent
- £18,000
- Void weeks (2)
- −£692.31
- Letting fee (12%)
- −£2,076.92
- Service charge, insurance, maintenance
- −£2,400
- Annual net income
- £12,830.77
What it costs to buy
- Purchase price
- £300,000
- SDLT, with surcharge
- £20,000
- Other purchase costs
- £2,500
- Total purchase cost
- £322,500
Example figures.
See the calculation steps
- £1,500 × 12 = £18,000 annual rent
- £18,000 ÷ £300,000 × 100 = 6.00% gross yield
- £18,000 × 2 ÷ 52 weeks = £692.31 lost to void weeks
- £18,000 − £692.31 = £17,307.69 rent collected
- £17,307.69 × 12% = £2,076.92 letting fee
- £2,076.92 + £1,200 + £300 + £900 = £4,476.92 running costs
- £17,307.69 − £4,476.92 = £12,830.77 annual net income
- SDLT on £300,000 with the additional-property surcharge = £20,000
- £300,000 + £20,000 + £2,500 = £322,500 total purchase cost
- £12,830.77 ÷ £322,500 × 100 = 3.98% net yield
Rates as of