Investing In UK Property: Understanding The Difference Between Gross & NET Yields | Home

Monday 19 June 2023

Investing in property is a great way to build wealth, but as with any investment, potential risks are involved. Many factors can affect property investment profitability & one way to assess this is through looking at yields. There are two yields to look at - Gross & Net Yields.

In this blog post, we will take a deep dive into the meaning of the two so that you can better understand how they impact potential returns on your investments and make informed decisions when investing in UK properties.

What is a Gross Yield?

Gross Yield measures the amount of rent received from a rental property BEFORE any expenses are deducted, such as management charges, maintenance costs & service charges. The higher the rate - generally speaking - the better value for money.

To calculate the Gross Yield on a property, the calculation is:
Gross Rent Per Annum / Property Purchase Price.

What is a Net Yield?

Net yield refers to the actual profit after all related costs have been deducted from Gross returns each year. Often the mortgage interest & tax is not included in this calculation at ERE Property as each individual’s situation will be different. 

The Net Yield is the most accurate metric for determining returns from an investment property over time.

To calculate the Net Yield on a property, the calculation is: Gross Rent Per Annum – Annual Costs / Property Purchase Price.

Factors that can affect the Yields on property investments:

When investing in UK property, various factors can affect a property's yield in terms of Gross & Net yields. Stamp Duty Land Tax (SDLT) is one example of an ongoing cost that could directly impact a property investment's Net Yield.

The housing market also plays an integral role in calculating your return on investment since localised supply/demand dictates how attractive certain areas will be and how much rental income will be generated each month.

The Benefits of Investing in UK Property with High Net Yields:

The benefits of investing in UK properties that offer high Net Yields are numerous, as the higher the Net Yield, the more profit investors will generate.

Also, purchasing a buy-to-let property through a property investment firm like ours may present certain benefits not available with private deals – including development incentives and exclusive discounts – so be sure to explore those options thoroughly before purchasing.

At ERE Property, we have fantastic investment opportunities; one is Westminster Park, a luxury development in Liverpool with strong short-term let yields of up to 17.17% at prices from £183,390. There’s also excellent incentives when investing in this luxury development including a free furniture pack and up to £5000 Stamp Duty contribution.

For more details about our Liverpool investment opportunities, please click here.

If you have any further questions about investing in UK property or would like to discuss our current investment opportunities, please do get in touch:

HK | +852 6348 9813

UK | +44 (0) 113 380 8930


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