Gross yield, net yield and cash return
Gross yield is a year's rent divided by the price. It's the figure on property listings and the quickest way to compare one area with another, but it ignores every cost.
Net yield takes off running costs and empty weeks, and divides by what the property really cost you, including stamp duty, fees and any work before letting. This is the better guide to how hard the property works.
Cash return takes off mortgage interest too, and divides by the cash you put in. Borrowing raises this figure when net yield is above your mortgage rate, and drags it down when it's below.
Worked example
A £250,000 flat letting for £1,250 a month has a gross yield of 6.0%. Allow two empty weeks, a 12% agent and £1,800 of other costs, and add £15,000 of buy-to-let stamp duty, £2,500 of fees and £3,000 of work. Net yield drops to 4.0%.
With a 25% deposit and an interest-only mortgage at 4.6%, the landlord puts in £83,000 and has about £190 a month left before tax, a cash return of 2.7%. Net yield is below the mortgage rate, so borrowing is reducing the return rather than boosting it.
Wondering whether it's worth buying at all at today's rates? Read is buy-to-let still worth it in 2026?
Questions landlords ask
What is a good rental yield?
It depends on the area and your aims. Higher-yield areas often see slower price growth, and lower-yield areas such as much of London rely more on growth. A useful test is whether net yield beats your mortgage rate. If it doesn't, each pound you borrow costs more than it earns.
Should I use gross or net yield?
Use gross yield to compare listings quickly, and net yield to decide. Two properties with the same gross yield can have very different net yields once service charges, ground rent and repairs are counted.
Does yield include tax?
No. Yield is worked out before tax. To see what you keep after tax, including Section 24 and the April 2027 rate rise, use the Section 24 calculator. The button under the results carries your figures across.
How is cash return different from yield?
Yield measures the property. Cash return measures your money, after mortgage interest, against the deposit and buying costs you paid. It's the figure to compare with other investments.
Sources
Last updated 1 October 2026.