Rental Yield Calculator

What is rental yield?

Rental yield expresses rental income relative to property value. It is one of the most widely used property metrics, allowing investors to compare the income-producing potential of different properties.

How is gross rental yield calculated?

Gross yield compares the total annual rental income against the property value, before deducting any running costs.

Example:

• Property value: £250,000
• Monthly rent: £1,250
• Annual rent: £15,000

£15,000 ÷ £250,000 × 100 = 6.00% gross yield

What is net rental yield?

Net yield provides a clearer picture of operating performance by deducting the annual property costs from the rental income before comparing it with the property value.

Different investors may include different costs when calculating net yield, such as insurance, maintenance allowances, or management fees. Results are only as useful as the assumptions entered.

Example:

• Annual rental income: £15,000
• Annual property costs: £3,000
• Net annual property income: £12,000

(£15,000 − £3,000) ÷ £250,000 × 100 = 4.80% net yield

Gross yield vs net yield

Gross yield is useful for quick property comparisons when screening potential investments.

Net yield provides additional context by recognising recurring property costs, revealing how efficiently the property operates.

Neither by itself represents the investor's complete investment return.

What doesn't rental yield tell you?

Rental yield alone does not account for every aspect of a property investment. Depending on the calculation used, it may not reflect:

• financing;
• mortgage interest;
• acquisition costs;
• taxation;
• void periods;
• capital expenditure;
• changes in property value;
• transaction costs.

For more context on using these figures, read our guide to gross, net and portfolio rental yield. To estimate the return on the cash invested after property and finance costs, use the property ROI calculator.