What does 'percentage yield' mean?

Property Expert:
Stephen Ludlow
Director, ludlowthompson.com
Q: What does ‘percentage’ yield of property mean?

Pic: What is the yield on your property? 

The net yield is after fees, repairs and running costs.
Stephen Ludlow, Director
Stephen's Response:

The "yield" of a property tells you how much of an annual return you are likely to get on your investment. It is calculated by expressing a years rental income as a percentage of how much the property cost.

In other words, if the estimated weekly rental on a flat is £200, the annual rental would be 52 times that, or £10,400. And if the flat cost £100,000 to buy, then the "yield" would be described as 10.4%.

Remember that this is the gross yield.The net yield is after fees, repairs and running costs have been taken into account. (Fees are likely to include Stamp Duty, solicitor's and surveyor's fees, and letting and management fees). Repairs are for everyday repairs such as plumbing and decorating. Running costs include such things as service charges, ground rents, and buildings and contents insurances. That's the bad news. The good news is that rental income is taxed after expenses such as mortgage interest, fees and property maintenance have been deducted.

 

Disclaimer:
Neither ludlowthompson nor their ‘experts’ take any responsibility for any action or loss incurred by readers of these pages. The reader acts on advice at their own risk. Answers to questions are not exhaustive. Financial advice must always be sought from a professional financial adviser.

 

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