- Rental yield
- the annual rental income a property produces, shown as a percentage of its cost.
- Gross yield
- annual rent divided by the property price, times 100. It ignores running costs and is only a quick filter.
- Net yield
- annual rent minus running costs, divided by the total you invested including buying costs, times 100. It is the realistic figure.
- Cash-on-cash return
- annual profit after all costs divided by the actual cash you put in, mainly the deposit and buying costs, which matters most when you use a mortgage.
- Void period
- time when the property sits empty with no rent, a cost that net yield should allow for.
Key facts
- On a £200,000 property with £12,000 rent, gross yield is 6.0% and net yield is 4.2% after £3,600 of costs
- Standard buy-to-let gross yield benchmark for 2026 is 5% to 8%
- Net yield usually runs one to two points below gross once running costs are included
- Cash-on-cash return matters most on mortgaged purchases when comparing true returns
Run your own numbers with the rental yield calculator, then model the full deal, mortgage and all, in the buy to let calculator.
Yield is the gross return; what you keep depends on tax. See how landlord tax works in buy to let tax changes guide and the purchase cost in stamp duty rates guide.
Gross yield vs net yield: the key distinction
Most yield figures quoted by estate agents and property portals are gross yields. Net yield is what matters.
Gross yield formula: Annual rent divided by property purchase price, multiplied by 100
Net yield formula: (Annual rent minus annual costs) divided by property purchase price, multiplied by 100
What annual costs to include:
- Letting agent fee (typically 10% to 15% of rent including management)
- Buildings and landlord insurance (£200 to £500 per year)
- Maintenance and repairs (budget 1% of property value per year)
- Service charges and ground rent (leasehold properties)
- Voids (periods of vacancy, budget 5% to 10% of annual rent)
- Mortgage interest (if leveraged investment)
- Accountancy fees for tax filing
Worked example: £180,000 flat, £900 monthly rent
Gross yield: (£10,800 / £180,000) x 100 = 6.0%
Net yield calculation:
Annual rent: £10,800
Letting agent (12%): £1,296
Insurance: £350
Maintenance (1% of value): £1,800
Void allowance (8%): £864
Total costs: £4,310
Net annual income: £6,490
Net yield: (£6,490 / £180,000) x 100 = 3.6%
This shows the gap between the 6% gross headline figure and the 3.6% net reality. Add mortgage interest costs and net yield for a leveraged investor may fall further to 1% to 2%.
Rental Yield Calculator
Calculate both gross and net yield for any property.
Regional rental yields: UK comparison 2025
| City/Region | Average house price (approx) | Average monthly rent | Gross yield |
|---|---|---|---|
| Liverpool | £148,000 | £875 | 7.1% |
| Manchester | £222,000 | £1,100 | 5.9% |
| Leeds | £218,000 | £1,050 | 5.8% |
| Birmingham | £235,000 | £1,100 | 5.6% |
| Sheffield | £185,000 | £850 | 5.5% |
| Edinburgh | £295,000 | £1,250 | 5.1% |
| Bristol | £370,000 | £1,450 | 4.7% |
| London (outer) | £430,000 | £1,600 | 4.5% |
| London (inner) | £600,000 | £1,800 | 3.6% |
Source: Rightmove and Zoopla rental data, ONS UK House Price Index, Q4 2025. Figures are approximate market averages and vary significantly by property type and specific location.
Expert Tip
Yield and capital growth tend to be inversely correlated in UK property. Cities with the highest gross yields (Liverpool, Bradford, Sunderland) typically show lower long-term capital growth. London has very low yields but has shown historically stronger capital appreciation. Your investment strategy should determine which metric you prioritise: income now (high yield) or asset appreciation over time (London/southeast).What voids (empty periods) do to your yield
A void of just one month per year reduces a 6% gross yield to 5.5%. A two-month void reduces it to 5%. For properties in areas with high rental demand, voids tend to be short. For properties in weaker rental markets or at higher price points, voids can be longer and more damaging to returns.
Practical ways to reduce voids:
- Price rent at market rate, not aspirationally above it
- Use a managed letting service that actively re-lets before current tenants leave
- Maintain the property in good condition to attract and retain good tenants
- Ensure EPC compliance (Energy Performance Certificate rating E or above required for legal lettings)
EPC requirements and their cost impact
From April 2026, all new tenancies require an EPC rating of at least E. Properties with an F or G rating cannot be legally let. The government has been consulting on raising the minimum to C by 2028, though this has not yet been legislated.
Improving a property from D to C rating typically costs £5,000 to £15,000 in insulation, heating upgrades, and other measures. This capital cost reduces your effective net yield if not factored into the original purchase price.
Rental yield vs other investments
| Investment type | Typical yield/return | Key risk |
|---|---|---|
| Buy-to-let (net of costs) | 2% to 4% | Void periods, legislation, illiquidity |
| UK 10-year gilt | Approximately 4.5% (2025) | Interest rate risk |
| Cash ISA | 4.0% to 4.5% (easy access, 2025) | Inflation erosion |
| UK equity index (FTSE 100, dividend) | 3.5% to 4.5% | Market volatility |
| Stocks and Shares ISA (growth) | Long-run average 7% | Short-term volatility |
In a higher interest rate environment, the risk-adjusted case for buy-to-let requires higher gross yields and lower leverage than was required during the low-rate years of 2010 to 2022.
Official sources
- ONS: UK House Price Index
- MHCLG: English Housing Survey
- Rightmove and Zoopla rental market data, Q4 2025
Related Calculators
Frequently Asked Questions
A gross yield of 5% to 7% is generally considered good in the current market. Below 4% gross requires significant capital appreciation to justify the investment. Above 8% often comes with additional risks.
Gross yield is calculated on rental income alone without deducting costs. Net yield deducts all operating costs from rent before dividing by the property value.
For gross yield: divide annual rent by purchase price and multiply by 100. For a £900/month rent and £180,000 purchase: (£10,800 / £180,000) x 100 = 6.0%.
Liverpool consistently shows among the highest gross yields at around 7% to 8% for well-located properties. Other high-yield areas include Bradford, Hull, and parts of the North East.
Use gross yield as a quick filter when scanning listings, because it is fast to work out from the asking price and rent. Use net yield to make the actual decision, because it takes off running costs such as management, insurance, maintenance and void periods and shows what the property really returns. Net yield is usually one to two points lower than gross.
Gross yield does not, and a simple net yield often leaves mortgage interest out too. To see the true return on a mortgaged property, work out the cash-on-cash return, which counts mortgage interest as a cost. Remember that under Section 24 individual landlords no longer deduct mortgage interest in full for tax, which is covered in our buy-to-let tax guide.
Yield measures income against the property value, while cash-on-cash return measures profit against the actual cash you put in, mainly the deposit, stamp duty and fees. On a mortgaged purchase the cash-on-cash figure can be very different from the yield, because you control the whole property with only part of the money.
Not always. Very high yields often come with higher risk, weaker capital growth, more intensive management or cheaper areas with longer voids. A 6% gross yield in a stable area can beat a 9% yield that needs constant work. Weigh yield against growth prospects and how hands-on you want to be.
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James Hartley is a Chartered Management Accountant (CIMA) with more than eight years of experience in UK tax, payroll and compliance. He holds a BSc in Finance and Economics from the University of Manchester and spent his early career at a Big 4 accounting firm. He founded WhatsUK to build free UK financial calculators and guides verified against official HMRC sources. He authors every calculator and article on WhatsUK.
Sources & Official References
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Disclaimer: This calculator provides estimates based on standard HMRC rates for 2026/27. Results may vary based on individual circumstances. This is not financial advice. Always consult a qualified accountant or CIMA-qualified financial adviser for personal tax matters.