Net initial yield (NIY) is the rent a UK investor receives today, after costs the landlord cannot recover, divided by the price plus purchaser's costs. Reversionary yield uses the rent the building should earn at market rent, over the same outlay. On a building let below market rent the two numbers differ, and the gap is what you are being asked to pay for.
The calculation, with SDLT and fees
The figures below are illustrative. They describe no real property or market and show the arithmetic only.
An office building is offered at 3,000,000 pounds. It is let to one tenant on a full repairing and insuring lease at 180,000 pounds a year, with an upward-only rent review in four years. The investor's surveyor puts the market rent (ERV) at 225,000 pounds.
| Строка | Сумма |
|---|---|
| SDLT on 3,000,000 pounds, non-residential rates (0% to 150,000; 2% on the next 100,000; 5% above 250,000) | 139,500 |
| Agent, 1.0% | 30,000 |
| Legal, 0.5% | 15,000 |
| VAT at 20% on the two fees | 9,000 |
| Purchaser's costs | 193,500 (6.45% of price) |
| Price plus costs | 3,193,500 |
- Net initial yield: 180,000 ÷ 3,193,500 = 5.64%. On the price alone the same rent is 6.00%, so the costs take about 0.36 percentage points off what the investor earns.
- Reversionary yield: 225,000 ÷ 3,193,500 = 7.05%, a 25% uplift on the passing rent, reached only if the review delivers the ERV.
- If the landlord carries 9,000 pounds a year that is not recoverable (for example management), net rent is 171,000 pounds and the NIY is 5.35%.
The SDLT rates shown are the non-residential bands for England and Northern Ireland. Scotland and Wales tax commercial purchases under their own regimes, and VAT depends on whether the seller has opted to tax. Confirm both with your adviser.
Which one prices the building
Read both, and ask what stands between them. The 7.05% only exists after four years, and only if three things hold: the tenant is still there, the review is upward-only and not capped, and the ERV is real. A weak covenant or a short lease turns the reversion into a risk, not an asset. That is why a price is rarely set from reversionary yield alone, and why term-and-reversion and equivalent yield methods exist to blend the two.
Where the numbers go wrong
- The denominator. Some calculators divide by price only; others add purchaser's costs. The two give different yields for the same rent. State which one you used.
- Gross rent in the numerator. NIY takes rent after irrecoverable costs. Service charge shortfalls on empty units are the usual leak in a multi-let building.
- Unconfirmed ERV. The reversion is as good as the evidence behind the market rent. A broker's number with no named lettings is a claim, not evidence.
- Costs treated as a flat percentage. SDLT is banded, so total costs as a share of price rise with the price toward the convention. Compute them for the actual price.
Where Реалист fits, and what it does not replace
Реалист reads the tenancy schedule, memorandum and seller model, traces the passing rent, break and review dates to the file they came from, and lists what is missing. Its record data is deepest in the United States; it has no UK comparable-sales database of its own and works from 2,100+ sources and your documents.
It does not replace a RICS valuation or a surveyor's opinion of ERV. It does not apply SDLT, LBTT, LTT, VAT or lease law, and it gives no buy or sell call. Those stay with your valuer, solicitor and tax adviser. See how Реалист handles a UK deal file или запросить демо.
Вопросы и ответы
How do I calculate net initial yield including SDLT and fees?
Divide net passing rent by price plus purchaser's costs. Here that is 180,000 ÷ 3,193,500, or 5.64%.
What is the difference between net initial yield and reversionary yield?
NIY uses today's rent; reversionary yield uses market rent over the same outlay. Here they are 5.64% and 7.05%.
Which yield should I use for a below-market-rent building?
Use both, plus the time to reversion and the tenant's covenant. A single yield hides the trade between income now and income later.
What purchaser's costs do valuers assume?
About 6.8% is a common convention on larger lots. On this 3,000,000 pound example the real figure is 6.45%.
Обновлено 25 октября 2026.