You've found a property, priced up the rent, and the listing is shouting "7.2% yield". Is that good? Not yet, not until you know two things: whether that number is gross or net, and where in the country the property sits. A high gross yield in the North East and a modest one in the South East can leave a similar amount in your pocket once costs and tax have taken their cut.
Here is how to judge a yield properly in 2026, and what "good" actually looks like region by region.
Gross yield is the shop window. Net yield is the till.
Two numbers get called "yield" and they are miles apart.
Gross yield = (annual rent / property price) × 100
Net yield = ((annual rent − annual running costs) / property price) × 100
Gross ignores every cost of actually being a landlord. Net is what is left after the money that leaves your account each year, before mortgage and before tax. Agents and portals quote gross because it is the bigger, prettier number. You should make decisions on net.
Note that net yield here excludes your mortgage. That is deliberate: yield measures the property, not your financing. Once you layer on a loan, you are into cash-on-cash return, which is a separate calculation.
A worked example: one flat, three very different numbers
Take a property at £180,000 letting for £950 a month (£11,400 a year).
Gross yield: £11,400 / £180,000 = 6.3%
Now the running costs for a year, as a freehold house:
| Cost | Amount |
|---|---|
| Letting/management (10% of rent) | £1,140 |
| Landlord insurance | £300 |
| Repairs and maintenance | £600 |
| Compliance (gas safety, EICR and EPC amortised) | £150 |
| Void and arrears allowance (approx 4%) | £456 |
| Total costs | £2,646 |
Net income: £11,400 − £2,646 = £8,754
Net yield: £8,754 / £180,000 = 4.9%
Same property as a leasehold flat with a £1,400 service charge and ground rent, and the costs jump to £4,046. Net income falls to £7,354 and net yield drops to 4.1%.
So one 6.3% gross headline is really 4.9% or 4.1% net, depending on tenure. That gap is the whole point.
What "good" looks like by region in 2026
Gross yields vary hugely across the UK, mostly because prices vary far more than rents do. As a broad pattern (these are typical advertised ranges, not a promise for any given street, so always check current local data), you tend to see:
| Region | Typical gross yield range |
|---|---|
| North East | 7-9% |
| North West | 6-8% |
| Yorkshire and the Humber | 6-8% |
| Scotland (central belt) | 6-8% |
| Wales | 5.5-7% |
| Midlands | 5-7% |
| South West | 4-6% |
| South East | 4-5% |
| London | 3-5% |
To turn any of these into a rough net figure, knock off roughly a quarter to a third for a freehold house, and more for a leasehold flat, as the worked example shows.
That reframes the question. A "good" gross yield in London might be 5%. A "good" gross yield in Middlesbrough might be 8%. Judging a Teesside terrace by a London benchmark, or the other way round, tells you nothing useful.
The real test: does net yield beat your cost of money?
Region-hopping for the highest number misses the point. The benchmark that matters is your own cost of capital.
A genuinely good net yield in 2026 is one that comfortably clears:
- your mortgage pay rate, with margin to spare;
- your risk (higher-yield areas can carry more arrears, voids and management hassle); and
- the return you would get doing something safer with the money.
With buy-to-let mortgage rates elevated compared with the 2010s, a net yield of 4% against a mortgage costing more than that means the rent alone is not covering the borrowing. That can still work if you are betting on capital growth, but you should know that is the bet you are making.
Section 24 quietly lowers your real net
For individual landlords, Section 24 restricts mortgage-interest relief to a 20% basic-rate tax credit rather than a full deduction (companies still deduct interest in full). A higher-rate taxpayer with a big interest bill can see their after-tax return fall well below the headline net yield. See gov.uk on the restriction on finance-cost relief.
This is why two landlords buying the identical flat can rate it differently. A cash buyer or a limited company keeps more of that 4.9% than a higher-rate individual with a large mortgage.
A rough grading for 2026
Using net yield (after costs, before mortgage and tax):
- Below 3.5%: thin. Usually only stacks up in the South and London where the play is capital growth, not income.
- 4% to 5%: solid across most of England and Wales for a well-bought property.
- 5% to 7% or more: strong, typical of northern cities, the central belt and parts of Wales, but check why it is that high before celebrating.
None of these is a target to chase blindly. A 7% net yield in an area you do not understand can cost you more in voids and repairs than a steady 4.5% in a town you know.
Run your own numbers
The only yield that matters is the one for the specific property in front of you, with its real rent, real costs and real tenure. If you want to pressure-test a listing, the rental yield calculator turns a gross headline into a net figure in a few seconds, so you can compare like with like before you offer.
Get the net number, compare it with your cost of borrowing, and only then decide whether "7% yield" is a good deal or just a good headline.
This is general information, not tax or financial advice. Figures cited are correct as at July 2026; rates and rules change, so check the current position before you buy.
