Annual rent divided by what the property cost, times one hundred. A flat at £250,000 let at £1,100 a month gives £13,200 a year, which is a gross yield of 5.28%.
That is the gross figure and it flatters. Net yield takes the running costs off first: insurance, management, maintenance, ground rent and service charge if it is a flat, and the weeks it sits empty between tenants.
Neither figure includes the mortgage, and neither includes tax. Gross yield is useful for comparing two properties quickly. It is not useful for working out what you will actually have at the end of the month.
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