What yield does the property return?
Work out the gross and net rental yield on a buy-to-let, and the monthly income left after running costs — before mortgage interest and tax.
The property
How it’s worked out
Yield is shown before mortgage interest and tax. Gross yield = annual rent ÷ price; net yield = (annual rent − running costs) ÷ price. For the full after-tax picture including Section 24 and the mortgage, use the buy-to-let analyser.
Gross yield, net yield, and which one lies less
Gross yield is annual rent over purchase price: £1,100 a month on a £250,000 property is £13,200 a year, a 5.28% gross yield. It's the number in every listing because it's the biggest available. Net yield subtracts the running costs that arrive whether or not anyone mentions them, and £2,500 a year of voids, repairs and insurance drags this example to 4.28%, with £892 a month actually landing. Neither figure includes a mortgage: yield measures the property, financing measures the deal. Both formulas fit in a breath: gross yield = annual rent ÷ price, and net yield = (annual rent − running costs) ÷ price.
What counts as a good yield
UK yields typically run somewhere between 4% and 8% gross, higher up north where prices are lower against rents, lower in London where capital growth carries more of the argument. The more useful benchmark is your own alternative: a 4.28% net yield needs defending against 4-something-percent savings accounts that involve no tenants, no boilers and no phone calls, which is why serious landlords talk about total return, yield plus growth, rather than yield alone.
From yield to verdict
Yield is the opening question of a longer interview. The buy-to-let analyser adds the mortgage, tax and Section 24 to reach an after-tax monthly figure, and the property vs investing calculator lines the whole venture up against putting the same deposit in the market. A yield that survives all three tools is a deal; a yield that only survives this one is a listing.
Common questions
What is a good rental yield in the UK?
It varies by area, but many buy-to-let investors look for a gross yield of around 5–8%. Northern cities often yield more than London and the South East, where prices are high relative to rents. Remember gross yield ignores the mortgage, tax and voids, so a healthy-looking gross can become a thin net.
What is the difference between gross and net yield?
Gross yield is annual rent divided by the property price. Net yield subtracts running costs — insurance, letting or management fees, maintenance and the like — before dividing by the price. Net yield is the more honest figure, though it still comes before mortgage interest and tax.
Does rental yield include the mortgage?
No. Yield measures the property’s return, not your return on the cash you put in. To see cashflow after the mortgage and Section 24 tax, and the return on your actual deposit, use the buy-to-let analyser.
These results are estimates for general information only and are not financial advice. Property decisions have real consequences — check every figure and take appropriate professional advice before acting. Read the full disclaimer.