Frequently asked questions
What is a good rental yield in the UK?
As a rough guide, a gross yield around 5–6% is typical nationally, and many investors look for a net yield of at least 5% to justify the risk and effort. Northern regions often reach 7–9% gross, while London is usually lower at 2.5–4.5%.
What is the difference between gross and net yield?
Gross yield is annual rent divided by the property price. Net yield subtracts your running costs — letting fees, maintenance, void periods and insurance — before dividing by the price, so it reflects what you actually keep. Net yield is typically 25–40% lower than gross.
How do I calculate rental yield?
Gross yield = (monthly rent × 12) ÷ property price × 100. For net yield, subtract your annual running costs from the annual rent first. For a mortgaged property, cash-on-cash return divides the profit after mortgage interest by the cash you actually invested (deposit and purchase costs).
Which costs reduce my net yield?
Typically letting-agent fees (10–12% of rent for full management), maintenance (around 1% of the property value a year), void periods (about 5% of rent), landlord insurance, and any ground rent or service charge on a leasehold. Mortgage interest then reduces your cash return further.
What is cash-on-cash return (ROI)?
It is the annual profit after running costs and mortgage interest, divided by the cash you put in (deposit plus purchase costs). With a mortgage, a modest net yield can still mean the property runs at a loss once interest is deducted — so check this figure carefully.
Does rental yield vary by region?
Strongly. Gross yields range from about 2.5–4.5% in London to 7–9% in the North West, with the Midlands, Yorkshire and the North East in between. Higher-yield areas often have slower capital growth, so investors weigh income against price appreciation.