Gross Yield
Annual rental income as a percentage of the property's purchase price, before any costs are deducted.
Gross yield is the simplest measure of a property investment's return. It is calculated as:
Gross Yield = (Annual Rent ÷ Property Price) × 100
For example, a property purchased for £200,000 generating £12,000 per year in rent has a gross yield of 6%.
Why It Can Be Misleading
Gross yield ignores all running costs — mortgage payments, service charges, agent fees, insurance, repairs, and void periods. A property with a 7% gross yield could easily have a net yield of 3% or less once real costs are factored in.
This is why experienced investors focus on net yield and cashflow rather than headline gross figures. Estate agents and property listings almost always quote gross yield because it looks more attractive.
When Gross Yield Is Useful
Gross yield is still useful as a quick screening tool. It helps you rapidly compare properties before doing deeper analysis. As a rule of thumb, most UK BTL investors look for a minimum gross yield of 5–7%, though this varies significantly by region.