Holiday let yield and ROI calculator

How the yield calculator works

We work out the gross yield as the projected annual short-let income divided by the price, expressed as a percentage. The net yield deducts the running costs from the income first, then divides by the price, so it reflects what you keep after cleaning, management, platform fees, utilities, insurance and maintenance. The annual net income is simply the income minus those costs.

The formula is gross yield equals projected annual income divided by price multiplied by one hundred. Net yield equals projected annual income minus annual costs, divided by price, multiplied by one hundred. Leave costs at zero if you only want the gross figure. Your projected annual income is best built from a realistic nightly rate multiplied by the nights you expect to let, which is the occupancy across the year.

Gross versus net on a holiday let

Gross yield is the headline figure, but net yield is the honest one on a holiday let, where cleaning, management, platform fees, utilities and turnover between guests all come out of your income. A property let at an average nightly rate of 150 pounds at 65 percent occupancy produces roughly 35,600 pounds a year before costs. The net figure is effectively the income a lender will use to size a loan, so it does double duty in your appraisal. To see how the income supports a loan, use our how much can I borrow calculator.

Worked example

On a 450,000 pound holiday let producing 45,000 pounds of projected short-let income a year, the gross yield is 10.00 percent. Deduct 15,000 pounds of running costs and the annual net income is 30,000 pounds, giving a net yield of 6.67 percent. Before treating that as the run rate, we would sense check the nightly rate and occupancy behind it against comparable properties in the area.