Net Yield

Net yield is a more meaningful measure of property return than gross yield because it accounts for the costs of owning and operating the property. It shows what you actually earn as a percentage of the purchase price, after deducting all running expenses.

Costs deducted to arrive at net yield typically include: mortgage interest, letting agent fees, landlord insurance, maintenance reserve, void allowance, service charge and ground rent (leasehold), accountancy, and compliance costs such as gas safety and EICR.

Net yield does not include mortgage capital repayment (a balance sheet movement, not an income statement cost) but does include mortgage interest (a genuine cost of the investment).

In the current market, a net yield of 3-5% on a standard BTL property is common for investors using 75% LTV finance. Higher net yields are achievable through higher gross yields (northern markets), lower costs (self-management), or less leverage (larger deposit).

Net yield is more useful than gross yield when comparing properties side by side because it reflects the real economics of each investment rather than just the headline rent-to-price ratio.