🏠 Real Estate
Gross vs Net Rental Yield: What's a Good Yield?
Rental yield tells you how hard a property's price is working as an income asset. Learn the difference between gross and net yield, how to calculate each, and what counts as a good yield.
Updated 20 August 2026 · 2 min read
Rental yield is the single most useful number for comparing income properties. It expresses the annual rent a property produces as a percentage of its value — so you can line up a flat in one city against a house in another and see which works harder as an income asset.
Gross yield: the quick screen
Gross yield ignores costs. It's the back-of-envelope figure you use to filter listings:
It's fast and useful for a first pass, but it flatters properties with high running costs. Two flats with the same gross yield can deliver very different amounts of money to your pocket.
Net yield: what you actually keep
Net yield subtracts the costs of running the property before dividing by the value:
Typical costs to include are management fees, insurance, maintenance and repairs, service charges or ground rent, and an allowance for void periods when the property sits empty. Our rental yield calculator works out both gross and net side by side so you can see the gap those costs create.
So what's a "good" yield?
There's no universal number, because yield trades off against other things — mainly the prospect of the property's value growing over time. As a rough guide:
- 3–5% gross is common in high-demand cities where buyers accept lower income in exchange for stronger long-term price growth.
- 5–8% gross is the range many long-term rental investors aim for as a balance of income and growth.
- 8%+ gross can appear in cheaper areas or with short-term lets, but higher yields often come with higher risk, more management and more variable demand.
Always compare net yields, not gross, when the properties have different cost profiles — a leasehold flat with a big service charge and a freehold house are not comparing like with like.
What yield doesn't tell you
Yield is an income measure. It says nothing about how a purchase is financed, and it doesn't capture capital growth — the change in the property's value over time. A lower-yielding property in a strong area can still be the better long-term outcome once growth is included. Treat yield as one input among several, alongside the cap rate for a financing-neutral view.
Frequently asked questions
- Should I use gross or net yield to compare properties?
- Use net yield when the properties have different running costs — for example a leasehold flat with a service charge versus a freehold house. Gross yield is fine for a quick first filter, but it overstates returns on high-cost properties.
- Does rental yield include mortgage costs?
- No. Rental yield measures rent against the property's value only, independent of how it's bought. That's deliberate — it lets you compare properties on their own merits rather than on someone's particular financing.