Gross vs net yield
Gross yield is annual rent divided by the property price. It is quick and useful for comparing areas, but it ignores every cost of actually being a landlord. Net yield subtracts running costs (management, insurance, maintenance, voids, service charges) before dividing by the price - so it reflects the income you keep before mortgage and tax.
- Gross yield = (monthly rent x 12) / property price.
- Net yield = (annual rent - annual costs) / property price.
- Neither figure includes mortgage interest or tax - use the Buy-to-Let Profit calculator for the after-tax picture.
Worked example
Property 180,000, rent 950/month = 11,400/year.
Gross yield = 11,400 / 180,000 = 6.3%.
Annual costs 2,600 (management, insurance, maintenance, allowance for voids).
Net yield = (11,400 - 2,600) / 180,000 = 4.9%.
What is a good yield in the UK?
It varies hugely by region. Northern English cities and parts of Wales and Scotland often show gross yields of 6-9%, while much of London and the South East sits at 3-5% with investors relying more on capital growth. As a rule of thumb, many buy-to-let investors look for a gross yield of at least 6% to leave room for costs, mortgage and tax - but always model the net figure for the specific property.