Gross yield is a sieve, not a decision.

The sieve is still useful. If a listing in a city you know shows a gross yield far below the others, you can close the tab. Illustration A, the London flat, grosses 5.45% on a £385,000.00 price and £1,750.00 a month. Illustration B grosses 6.18%. Illustration C, the shared house, grosses 10.24%. A sieve would rank C, then B, then A. That ranking is not wrong. It is unfinished.

Finish it and the order of comfort changes. After a void, running costs, and interest, A needs £2,020.76 put back in by the landlord each year. B keeps £650.04. C keeps £6,908.04, but only after £18,500.00 of works and a self-managed model, and the cash put in is £130,400.00 rather than the deposit alone. Cash-on-cash before tax is -1.59%, 0.90%, and 5.30%. The sticker said the shared house was almost twice the London flat. The cash you had to find, and the cash you keep, tell a narrower story.

What the sticker omits on purpose

Portals compute gross yield because it needs two numbers and no judgement. The omitted lines are exactly the ones that differ between a flat and a house. A leasehold service charge does not exist on the Leeds terrace. Inclusive bills do not exist on a flat let to one household who pay their own council tax. Stamp duty on an additional dwelling is large beside the deposit and identical in kind for all three, so a gross yield, which ignores purchase costs, flatters the more expensive building less than people think and flatters all of them more than it should.

There is a second yield, sometimes called net, which subtracts running costs but still forgets the mortgage, the void, or the tax. If a sheet does not say which costs came off, the word "net" is decoration. Our rule is dull: name every line, in pounds, for a year, and show the month as well.

A better first question

Ask what has to go right for the account to be untouched by you. On illustration B the answer is uncomfortable: the rent must stick, the void must stay near three weeks, the rate must stay near 5.49%, and the repairs must stay inside £1,410.00. Move any one of those and the year can flip sign. That is a fact about a thin margin, not a fact about Leeds.

Ask the same question of a high gross yield. Illustration C looks generous until the bills of £6,400.00 and the interest of £14,917.50 are on the page. A high yield that depends on five rooms staying full, and on you answering the boiler at 10pm, is a job with a building attached. Price the job or admit you are not doing it.

Use the sieve, then throw it away

Keep gross yield for the first pass through a search. Discard it before you pay for a survey. Rebuild the year with the method, then move one assumption with the stress tests. If you only remember one pair of numbers from this note, remember illustration A: 5.45% gross, and -£168.40 a month after interest.