Rental yield, explained without the jargon
Gross vs net yield, and what a healthy number actually looks like.
The simple version
Rental yield compares rent with property value. Gross yield uses rent before costs. Net yield is more useful because it reflects costs such as maintenance, insurance, voids and management.
A high-looking gross number can shrink quickly once real costs are included.
What to watch
Mortgage interest, repairs, tax and vacancy periods can all change the picture. The same rent can mean very different outcomes depending on debt and costs.
Yield also does not capture capital growth or risk, so it should be one view rather than the whole decision.
How PropertyView fits
PropertyView is planned for portfolio performance: rental income, equity, yield, costs and mortgage balances in one place.
Frequently asked questions
What is a good rental yield in the UK?
It depends on location and strategy, but many UK landlords look for a gross yield somewhere in the mid-single digits, with higher figures more common in the north and lower ones in the south east where property prices are higher. What matters more than a headline number is the net yield after costs and whether it comfortably covers your mortgage and leaves a margin for voids and repairs.
How do I calculate rental yield?
Gross yield is the annual rent divided by the property value, multiplied by 100. For example, £12,000 of annual rent on a £200,000 property is a 6% gross yield. Net yield subtracts running costs such as maintenance, insurance, management fees and void periods from the rent before dividing, which gives a far more realistic picture of what you actually keep.
What is the difference between gross and net yield?
Gross yield uses rent before any costs, so it always looks more attractive. Net yield deducts the real expenses of owning and letting the property, including maintenance, insurance, letting fees, ground rent and expected empty periods. A property with a high gross yield can end up with a modest net yield once those costs are included, which is why serious decisions should rest on the net figure.
Does rental yield include mortgage costs?
Standard yield calculations are based on the property value and do not include your mortgage, because yield is meant to describe the asset rather than how you financed it. In practice your mortgage interest heavily affects your actual cash return, so it is worth looking at yield alongside your financing costs and, ideally, a cash-on-cash return that reflects the money you personally put in.