Your numbers
Results update as you typeYield is the quickest way to compare one property against another, or against leaving the money somewhere else entirely. Gross yield tells you what a property produces; net yield tells you what you keep. The gap between them is where most portfolios are quietly won or lost.
Gross yield
Annual rent divided by the property's value. It ignores every cost, which is exactly why it is useful — it compares properties on the same basis regardless of how each one is financed or managed. Treat it as a screening number, not a decision.
Net yield
Annual rent minus annual running costs, divided by the property's value. Include letting fees, insurance, ground rent and service charges, maintenance, and a void allowance. This is the number that reflects how the property actually behaves.
What this calculation leaves out
Mortgage capital repayments, purchase costs such as stamp duty and legal fees, and tax. Since Section 24, finance costs no longer reduce taxable profit for individual landlords — they attract a 20% credit instead — so a highly geared property can show a healthy net yield and still produce a thin after-tax return.
Getting to a number you trust
The hard part is not the arithmetic, it is knowing your real annual costs per property. That means categorised transactions with each one attached to the right property, kept up to date rather than reconstructed every January.
Frequently asked questions
What is a good rental yield in the UK?
It depends heavily on region and property type, and any single benchmark is misleading. The more useful comparison is between your own properties on a consistent basis, and against your cost of capital.
Should I use purchase price or current value?
Current value tells you what the capital tied up in the property is earning today, which is the right question if you are deciding whether to keep it. Purchase price tells you how the original investment performed. Use current value for decisions, and be consistent across properties.
Does net yield include my mortgage?
Not in this calculation. Interest is a finance cost and capital repayment is not a cost at all — it converts cash into equity. Including either makes properties with different financing incomparable, which defeats the purpose.
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These are indicative figures for planning, not tax advice. Confirm anything you act on with a qualified accountant.