Free Tool
Yield & Acquisition Cost Calculator
True yield after costs — not just the headline pricing on the particulars.
Disclaimer. This tool provides an indicative yield calculation based on user inputs. It does not constitute valuation advice. Actual yield and value depend on asset-specific factors and market evidence.
Calculation mode
Price + rent → yields
Asset type
Core inputs
Purchase price
Annual gross rent
About this tool
What the Yield Calculator calculates
Yield is the single most-quoted number in UK commercial property — and the most misused. The headline 'gross yield' a broker quotes is rarely the yield an investor actually receives, because it ignores SDLT, agent and legal fees, voids and ongoing non-recoverable costs.
This calculator returns gross yield, net yield and the Net Initial Yield (NIY) used by RICS valuers and institutional investors — the rent that actually reaches the landlord, divided by the total capital outlay including purchaser's costs.
It also runs in reverse: enter the target NIY and the calculator solves for the price an investor can pay to achieve it.
Methodology
How it works
Gross yield
Gross yield is annual contracted rent divided by the purchase price. It is the broker's headline number and a useful sanity check, but it ignores both acquisition costs and ongoing income leakage.
Net yield
Net yield deducts running costs that the landlord can't recover from the tenant — typical non-recoverables, void allowance, management — from the rent before dividing by the purchase price.
Net Initial Yield (NIY)
NIY is the institutional benchmark. It takes net rent on day one and divides it by total capital outlay — purchase price plus SDLT, agent and legal fees, building survey and due diligence. NIY is what a valuer will use to triangulate price evidence, so it is the yield to negotiate against.
Reverse-yield mode
Enter a target NIY and the calculator works backwards from the net rent and acquisition-cost assumptions to the bid price. Useful for screening opportunities and for setting reserve prices on disposals.
Step-by-step
How to use it
- 01
Enter price and gross rent
Purchase price at exchange and contracted annual rent as at completion. If you're screening on ERV rather than passing rent, use the ERV number and note the assumption.
- 02
Add acquisition costs
SDLT is calculated for you; layer agent (typically ~1%), legal (~0.5%) and building survey. On institutional commercial deals the round-trip usually lands around 6.8%–7.0% of price.
- 03
Layer running costs
Add management (typically 8%–10% of rent), a void allowance (2%–5% for well-let assets, higher for weaker income) and any known non-recoverables.
- 04
Compare gross vs net vs NIY
The gap tells you how much of the headline yield is illusory. On a typical secondary asset the gap between gross and NIY is 80–150 basis points.
- 05
Flip to reverse mode when bidding
Enter the target NIY the buyer pool will accept and the calculator solves for the bid price. Use this to set reserves on disposals and to sanity-check what a competitor might pay.
The maths
The formula, explained
The three yields
Gross Yield = Rent / Price Net Yield = (Rent − running costs) / Price NIY = (Rent − running costs) / (Price + purchaser's costs)
Gross yield is the broker's number. Net yield strips running costs. NIY additionally grosses up the denominator for purchaser's costs — the yield you actually earn on capital deployed.
Worked example
£2m office let at £140,000 pa
- Gross Yield = 140,000 / 2,000,000 = 7.00%
- Net rent (10% mgmt + 3% voids + 1% non-rec) = £120,400
- Net Yield = 120,400 / 2,000,000 = 6.02%
- Purchaser's costs @ 6.8% = £136,000
- NIY = 120,400 / 2,136,000 = 5.64%
NIY 5.64% vs headline gross 7.00% — 136 bps of leakage
Watch out
Common mistakes
Quoting gross yield as 'the yield'
Gross yield ignores both cost and cost-of-carry. It's a screening number, not a negotiation number.
Forgetting purchaser's costs
SDLT, agent and legal fees sit outside the price on the SPA but very much inside your capital outlay. NIY is the only yield that reflects that.
Using contracted rent when the tenant is in a rent-free
Day-one net rent is nil during a rent-free period. Use the effective rent from the Effective Rent calculator instead.
Ignoring non-recoverables
Marketing budgets, insurance shortfalls, empty-rates on vacant units — all leak from headline rent before it reaches the landlord. Model them explicitly.
Assumptions & limitations
Key assumptions
- SDLT is calculated on the price entered using current bands — change the rate manually if a relief or election applies.
- Purchaser's costs default to a typical institutional bundle (agent, legal, survey); adjust per deal.
- Voids and management are expressed as % of rent — refine to a £ figure where the asset is unusual.
- Yields are produced on day-one income only. Rental growth, reversionary income and capex are modelled in the Property Investment Value calculator.
When you'd use it
Typical scenarios
Screening an off-market opportunity
Drop in price and rent, layer the standard cost bundle, and you have an institutional NIY in under a minute.
Setting a reserve on a disposal
Use reverse mode to translate the target NIY a buyer pool will accept into the price you should release the asset at.
Pricing a loan against the asset
Lenders price off NIY net of costs. Sense-check the borrower's pack against this calculator before sending out terms.
FAQ
Yield Calculator — frequently asked
What is Net Initial Yield (NIY)?
NIY is the annual net rent receivable on day one divided by the gross price of the property, including purchaser's costs. It is the institutional benchmark used by RICS valuers and is the most defensible yield figure to negotiate against.
Why is NIY lower than gross yield?
Because the denominator is larger (price plus SDLT, legal and agent fees) and the numerator is smaller (rent net of voids, management and non-recoverables). The gap is often 80–150 bps on a typical commercial asset.
What purchaser's costs should I assume?
On standard commercial deals, a 6.8%–7.0% round-trip is the long-running market shorthand once SDLT, agent (1%), legal (0.5%) and building survey are aggregated. Use the explicit fields to tailor it to your deal.
Does the calculator handle reverse yields?
Yes. Enter the target NIY and the calculator solves for the price you can pay to hit it, using the same SDLT and cost assumptions.
What's the difference between NIY and equivalent yield?
NIY is day-one income. Equivalent yield is the single discount rate that reconciles current rent with reversionary ERV over the lease term. Use NIY for screening and price evidence; use equivalent yield (and Term & Reversion) when the property has a reversion to model — that lives in the Property Investment Value calculator.
Related tools
Other Copping Joyce calculators
Valuation
Property Investment
Term & Reversion per unit, NIY/GIY, equivalent yield, WAULT, purchaser's costs and risk indicators.
Tax
SDLT Calculator
UK Stamp Duty across residential, mixed-use and commercial — HRAD, FTB relief, linked transactions and the 6+ dwellings election.
Income
Effective Rent
Headline, effective and net effective rent across residential and commercial leases — incentives, voids, costs and breaks.