Glossary
Gross yield
Annual rent as a percentage of the purchase price, before any costs.
What it means
Gross yield is the simplest way to compare rental properties: a year's rent divided by what you paid, shown as a percentage. It ignores every cost, from stamp duty to repairs, so it flatters every deal. Use it to sort a long list quickly, then move to net yield and cash flow for the ones that survive.
Worked example
ExampleA two-bed terrace bought for £120,000, let at £800 a month.
- Annual rent
- £800 × 12 = £9,600
- Gross yield
- £9,600 ÷ £120,000 = 8.0%
8.0% gross is strong for most of the UK, but the costs still decide whether it makes money.
Information, not advice. Example figures are fictional and for illustration only.