Every listing on this site publishes a gross yield, and ours is calculated the same way everybody else calculates it: annual rent divided by purchase price. It is a useful number for sorting a list. It is a bad number for making a decision, because it assumes the rent arrives twelve months a year, in full, with nothing spent on the building.
That never happens. Here is what comes out between the headline and the money that actually reaches you.
1. Void periods
A tenancy ends and the next one starts three weeks later. Assume one month of vacancy a year and you are already down 8.3% of the rent. In a market with heavy student turnover, budget six weeks.
The listing that quotes 6.8% is quoting twelve months. Nine hundred pounds a month across eleven months is not the same asset as nine hundred across twelve, and the difference compounds every year you hold it.
2. Management
Full management runs 10–15% of collected rent. You can self-manage and keep it — but price your own time honestly, and price the 11pm phone call about a boiler at what it is really worth to you.
The cheapest management fee in the market is the one charged by an agent who never inspects the property. You pay it back at the end of the tenancy.
3. Maintenance and the sinking fund
The rule of thumb is 1% of the property value a year, averaged over a decade. Some years it is nothing. The year the roof goes, it is twenty.
- Under ten years old: budget 0.5%, mostly cosmetic
- Ten to forty years: 1%, and expect one big item per decade
- Period property: 1.5% and a survey you actually read
4. Service charge and ground rent
On an apartment this is the one that quietly eats the return. A £4,800 annual service charge against £18,000 of rent is a quarter of your income gone before tax. Ask for three years of accounts, not the current year's demand — a charge that jumped 40% last year will jump again.
5. Tax, and the order it applies in
Rental income is taxed as income. Depending on where you are and how you hold the property, mortgage interest may or may not be deductible, and that single rule changes the arithmetic more than everything above it combined. Speak to an accountant before you buy, not after.
So what does the real number look like?
Take the Olive Court Villa listing on this site: $1,420,000, quoting 6.8% gross on $8,100 a month. Apply one month of void, 12% management, 1% maintenance and the service charge, and the net yield lands near 4.6%. Still a decent asset. Not the number on the card.
This is why the investment calculator on every property page has a "costs and voids" slider set to 22% by default, and why we show net yield next to gross. The default is not flattery — it is roughly what a well-run single let actually costs.
Try it yourself
Run the numbers on any listing.
Every property page has the calculator, with your own rent, cost and growth assumptions.
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