Reading a rental yield number without fooling yourself

Gross rental yield is the easiest number to calculate and the easiest one to be misled by. Divide annual rent by purchase price, and a property in a lower-cost city can look dramatically more attractive than one in London — right up until maintenance, management fees, insurance and void periods get factored in.

Net yield strips those costs out, and it's the number that actually reflects what lands in your account. A property advertised at an 8% gross yield can easily come down to 5% net once realistic costs are applied, and that gap tends to be wider on older housing stock with higher maintenance needs.

The other figure worth tracking is void period risk — how long a property typically sits empty between tenancies in that specific area. A slightly lower yield in a fast-letting location often outperforms a higher one where properties regularly sit vacant for six or eight weeks.