Rental Yield (Gross / Net)
Quick answer
The annual return on a rental property as a percentage of its value. Gross yield is annual rent ÷ property price × 100; net yield subtracts running costs (management, insurance, maintenance, a void allowance, ground rent/service charge) before dividing. Neither is the real return until you also take off mortgage interest and tax — after Section 24 and Making Tax Digital, the after-tax yield is what actually matters.
At a glance
- Gross yield
- Annual rent ÷ price × 100
- Net yield
- Gross minus running costs
- Missing piece
- Mortgage interest + tax (Section 24)
- Use
- Compare deals; not a cash-return figure
Full guide
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Open full guideWhy Rental Yield (Gross / Net) matters for landlords
The gross-yield headline agents quote is close to meaningless for a decision, because it ignores every cost that actually eats the return — a "7% gross" flat can be a 2% after-tax reality once management, voids, mortgage interest and the Section 24 credit are applied. The gap between gross and after-tax yield is exactly where over-leveraged landlords get caught, so the figure to underwrite a purchase on is after-tax net, not the advert’s gross. Model it before you offer, not after you complete.
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Related terms
Capital Gains Tax (CGT)
Tax on the profit from selling a rental property. From April 2024 the CGT annual exempt amount was reduced to £3,000 and residential property gains are taxed at 18% (basic rate) or 24% (higher rate). A CGT return must be filed and tax paid within 60 days of completion.
EPC (Energy Performance Certificate)
A certificate rating a property's energy efficiency from A (most efficient) to G (least efficient). Rental properties in England must meet at least an E. Properties rated F or G cannot be legally let under MEES. An EPC is valid for 10 years. Maximum fine: £5,000 per property.
EPC C Proposal
Confirmed government policy to raise the minimum EPC rating for rental properties in England from E to C. Confirmed in the January 2026 Warm Homes Plan, the standard applies to all privately rented homes from a single deadline of 1 October 2030 (the earlier "2028 for new tenancies" proposal was scrapped in a U-turn). Landlords should plan upgrades now but verify the detailed rules on GOV.UK.
Gas Safe Register
The official register of gas engineers qualified to work safely and legally on gas appliances in the UK. Only Gas Safe registered engineers can carry out the annual gas safety check required for rental properties. Verify an engineer's registration at gassaferegister.co.uk before any work starts.
Let Property Campaign
An HMRC disclosure facility that lets UK residential landlords come forward voluntarily about undeclared rental income from earlier years. In return for disclosing before HMRC opens an enquiry, landlords self-assess a reduced penalty: as low as 0% where there is a reasonable excuse, typically around 10–20% for an unprompted careless disclosure, rising toward 100% of the tax for deliberate concealment that HMRC discovers first. After registering an intention to disclose, the landlord has 90 days to calculate and pay the tax, interest and penalty.
MEES (Minimum Energy Efficiency Standards)
Regulations requiring rental properties in England and Wales to meet a minimum EPC rating of E. Landlords cannot grant a new tenancy or continue an existing one for an F or G property without a valid exemption. Maximum fine: £5,000 per property.