Glossary · UK
What is Gross Rental Yield?
A simple measure of a buy-to-let property's annual rental income as a percentage of its purchase price, before deducting any costs.
Full Definition
Gross rental yield is the most commonly quoted measure of a buy-to-let investment's income performance. It is calculated by dividing the annual rental income by the property value (or purchase price) and multiplying by 100. For example, a property purchased for £250,000 that achieves £12,000 per year in rent produces a gross yield of 4.8%. Gross yield is a useful quick comparison tool when screening investment properties but it is a superficial measure because it ignores all costs. Voids (periods of no rental income), letting agent fees (typically 8-15% of rent), maintenance and repairs, landlord insurance, mortgage interest (now restricted to 20% basic rate tax credit for individual landlords since 2020/21), and property management costs all reduce the real return. In 2026, average gross yields in the UK vary significantly by region: London prime property often yields 2.5-3.5%, while northern cities such as Manchester, Liverpool and Birmingham frequently offer gross yields of 5-8%. Because gross yield ignores gearing (the mortgage effect) and tax, investors should always calculate net yield and return on equity alongside it to make a meaningful investment decision.