Owning a Property

Gross vs Net Rental Yield Explained for UK Landlords

Gross and net rental yield are both useful metrics, but they tell very different stories about profitability. This guide breaks down how to calculate each figure and which expenses you must deduct to arrive at a realistic net yield.

Published: 1 Jan 2026 · Updated: 1 Mar 2026 · 6 min read

The Difference Between Gross and Net Yield

When landlords, agents, and property portals quote rental yield figures, they almost always mean gross yield — the annual rent divided by the purchase price, expressed as a percentage. Gross yield is easy to calculate and useful for quick comparisons, but it does not reflect what you actually pocket after running the property.

Net yield strips out all the costs of owning and letting a property. It is the number that tells you whether the investment genuinely makes economic sense. Many landlords who appear to be generating a 6% gross yield find their net yield closer to 3% once all costs are accounted for.

Use our [rental yield calculator](/rental-yield-calculator) to compute both figures accurately for your property.

How to Calculate Gross Rental Yield

The formula is straightforward:

**Gross Yield = (Annual Rent ÷ Property Value) × 100**

Example: A property worth £200,000 rented for £950 per month.

Annual rent = £950 × 12 = £11,400
Gross yield = (£11,400 ÷ £200,000) × 100 = **5.7%**

This takes no account of any costs. It is purely a measure of income relative to asset value.

How to Calculate Net Rental Yield

Net yield requires you to subtract all property-related costs from the annual rent before running the same calculation:

**Net Yield = ((Annual Rent − Annual Costs) ÷ Property Value) × 100**

What Expenses Reduce Net Yield?

For a typical single-let buy-to-let in England in 2026, annual costs commonly include:

Cost	Typical Annual Figure
Letting agent management fee (10–15% of rent)	£1,140 – £1,710 on £11,400 rent
Landlord buildings insurance	£200 – £400
Landlord contents insurance (if furnished)	£100 – £200
Gas safety certificate	£80 – £120
Electrical installation condition report (EICR) — amortised annually	£100 – £150
Boiler service	£80 – £120
General maintenance and repairs	£300 – £600
Letting agent tenant-find fee (amortised per year)	£200 – £400
Void period allowance (2–4 weeks per year)	£440 – £880 on £950/month
Accountancy / tax return	£150 – £300

A conservative total for a well-maintained property might be £2,800–£4,200 per year on the above example — reducing the net annual income to around £7,200–£8,600.

**Net yield = (£7,700 ÷ £200,000) × 100 = 3.85%** (using midpoint figures)

Mortgage Costs — Include or Exclude?

This depends on what you are measuring. Some landlords include monthly mortgage interest payments in their cost calculation to arrive at a "cash-on-cash return" — the return relative to the deposit and acquisition costs actually invested. Others exclude the mortgage to compare properties on an unlevered basis.

For consistency when benchmarking, most professional property investors present net yield before mortgage costs but disclose gearing separately. Our [rental yield calculator](/rental-yield-calculator) supports both approaches.

Why the Gap Between Gross and Net Matters

On a £200,000 property:

Gross yield of 5.7% = £11,400 per year
Net yield of 3.85% = £7,700 per year

The difference — £3,700 — represents real money leaving your account in costs each year. Investors who rely only on gross yield figures often discover that the investment performs significantly worse than expected once costs are factored in, particularly in the early years when one-off costs such as refurbishment and tenant-find fees hit hardest.

Always model net yield before committing to a purchase. It is the honest measure of what your property investment delivers.