## Understanding and Projecting Rental Property Income and Costs
Related check: [Buy To Let Stress Icr Calculator](/tools/buy-to-let-stress-icr-calculator).
Primary rule references for this decision are [GOV.UK Renters Rights Act overview for landlords](https://www.gov.uk/guidance/renters-rights-act-an-overview-for-landlords) and [Renters Rights Act Information Sheet 2026](https://www.gov.uk/government/publications/the-renters-rights-act-information-sheet-2026).
When projecting rental income, it is essential to go beyond gross rent to understand the true net yield. This involves accurately modelling two significant factors: void periods and letting fees. The Tenant Fees Act 2019, which came into effect in England, banned most letting fees for tenants, aiming to make renting more affordable and transparent. Since this legislation, tenants typically pay only rent, deposits, and specific capped charges. This has reshaped the cost structure for landlords and agents, as they may now absorb costs previously passed to tenants.
### The Impact of the Tenant Fees Act
The Tenant Fees Act 2019 significantly altered the income landscape for letting agents, with estimates suggesting substantial losses in fee income. This shift has led some agents to increase fees charged to landlords to compensate. Research indicates that while rental growth was modest initially after the act, more significant increases have occurred later, often driven by broader market factors like high demand and increased landlord costs, especially post-pandemic. These changes mean projected expenses and altered revenue streams must be factored into net rental yield calculations and overall cash flow analyses. Accurate rental projections require explicit budgeting for potential void periods and understanding this new cost structure.
### Projecting Void Periods
Void periods represent a direct loss of rental income and incur ongoing expenses. These costs can include mortgage payments, insurance, utilities, and council tax. While the exact duration varies, average void periods in England have been reported to be around 19 to 24 days in recent years. The associated costs can potentially exceed £1,100 per vacant property.
Several factors can influence the length of void periods. These include overpricing a property, ineffective marketing strategies, the property's condition, slow response times to tenant inquiries, and the introduction of new legislation. For example, the Renters' Rights Act, which came into effect in England on 1 May 2026, has introduced changes that may increase unpredictability in tenancy end dates. Existing tenancies and new tenancies became assured periodic tenancies running on a rolling basis without a fixed end date. A landlord cannot, for instance, ask for rent before a tenancy agreement is signed. The Section 21 no-fault eviction process is no longer available, requiring landlords to use applicable possession-ground processes. For rent arrears below three months, a court may allow the tenant to stay; however, at three months of arrears, a possession order becomes mandatory if specific requirements are met. Most landlords and agents were required to provide an official Information Sheet to each named tenant by 31 May 2026. The legislation did not mandate changing existing written tenancy agreements solely for this information duty.
Experts suggest that factoring in 8-10% of annual rent for vacancy is a prudent approach for accurate cash flow projections. Strategies to minimise voids include competitive pricing, maintaining high property standards, employing effective multi-platform marketing, responding quickly to inquiries, and focusing on tenant retention efforts.
### Calculating Net Yield with Voids and Fees
To build a realistic financial model, consider using a tool that accounts for these variables. The Bricks & Yield gross and net yield calculator provides a structured way to do this. For instance, using provided figures:
* **Purchase Price:** GBP 180,000
* **Monthly Rent:** GBP 1,500
* **Annual Rent:** GBP 18,000
* **Management Fee:** 10% of annual rent (GBP 1,800)
* **Maintenance Allowance:** 5% of annual rent (GBP 900)
* **Insurance:** GBP 600
* **Void Allowance:** 5% of annual rent (GBP 900)
* **Other Annual Costs:** GBP 600
Using these inputs:
* **Gross Yield:** 10% (GBP 18,000 / GBP 180,000)
* **Total Annual Operating Costs:** GBP 1,800 (Management) + GBP 900 (Maintenance) + GBP 600 (Insurance) + GBP 900 (Voids) + GBP 600 (Other) = GBP 4,800
* **Net Rent Before Borrowing Costs:** GBP 18,000 (Annual Rent) - GBP 4,800 (Operating Costs) = GBP 13,200
* **Net Yield Before Borrowing Costs:** 7.33% (GBP 13,200 / GBP 180,000)