HMO rental yield calculator
Work out gross yield, net yield and monthly cash flow for an HMO or any room-by-room let. Change any number and the results update.
Luke AshtonFounder of Bricky Bot and Based Lettings · Updated HMO rental yield calculator
Gross yield
13.8%
Net yield
9.4%
Cash flow after mortgage
£1,130 a month · £13,560 a year
Rent collected
£34,560 a year
Running costs
£9,600 a year · £160 per room a month
Before tax. Gross yield = rent ÷ price. Net yield = (rent − running costs) ÷ (price + buying costs); the mortgage isn’t a running cost, so it only affects cash flow. A guide, not financial advice.
The short answer
- Gross yield = annual rent ÷ property price.
- Net yield = (annual rent − running costs) ÷ (price + buying costs).
- For HMOs, judge on net yield and cash flow: bills, licensing and management make gross yield look better than it is.
How the numbers work
Rent is what you expect to collect: rooms × rent per room × 12, less the share of the year rooms stand empty (voids). Running costs are everything you pay to keep the house let, except the mortgage. Cash flow is rent, less running costs, less the mortgage. Planning a rise? The rent increase calculator shows each room’s new rent and the earliest date it can start.
| Figure | Formula | Use it for |
|---|---|---|
| Gross yield | Annual rent ÷ price | A quick first filter between properties |
| Net yield | (Rent − running costs) ÷ (price + buying costs) | Comparing an HMO with a single let fairly |
| Cash flow | Rent − running costs − mortgage | Whether the house pays for itself each month |
Costs HMO landlords forget
- Bills, if rent is bills-inclusive: energy, water, broadband, and usually council tax, which falls to the landlord in most HMOs. Our council tax checker gives the 2026/27 bill for any council and band.
- Management, if an agent runs the house: letting and check-in fees for every new tenant and VAT come on top of the percentage. Our property management fees calculator adds them up.
- The licence fee, spread over the licence term (licences commonly run for up to five years).
- Compliance: the annual gas safety check, the electrical inspection (at least every five years), fire alarm and emergency lighting servicing.
- Shared areas: cleaning, gardens, replacing furniture in kitchens and lounges.
- Turnover: room lets change hands more often, so allow for voids and the time each new tenant takes. Each new tenant needs an agreement: our free tenancy agreement template writes one per room, the pro rata rent calculator works out a mid-month move-in, and the landlord inventory template records the room’s condition.
Checking a specific house?
For HMO feasibility on a real address (licensing, Article 4, comparables), try Bricksmart’s HMO report. Bricksmart is our sister product and is free to start.
Questions landlords ask
How do you calculate rental yield?
Gross yield is the annual rent divided by the property price, as a percentage. Net yield takes the annual running costs off the rent first and divides by the price plus your buying costs.
What is the difference between gross and net yield?
Gross yield ignores costs, so it flatters properties with high bills or management. Net yield includes the running costs (bills, repairs, insurance, licensing, management), so it is the better way to compare an HMO with a single let.
Should the mortgage be included in net yield?
Usually not. Yield measures the property’s return on its value; the mortgage depends on how you financed it. That’s why the calculator shows cash flow after the mortgage separately.
What costs should I include for an HMO?
Any bills you pay because rent is bills-inclusive (energy, water, broadband, often council tax), repairs and maintenance, insurance, the HMO licence fee spread over the licence term, compliance checks (gas safety, electrical, fire alarm and emergency lighting servicing), cleaning of shared areas, and management or software fees.
Why do HMOs have higher yields than single lets?
Letting room by room usually brings in more rent for the same house. In return the costs and work are higher: bills, licensing, more frequent tenant changes, shared-area cleaning and closer management. Compare on net yield and cash flow, not gross.
Spend less time running the rooms
Bricky Bot is an AI lettings team for HMO landlords: enquiries, WhatsApp, repairs, compliance and rent, with nothing sent until you approve it.
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