Rental yield

Rental yield is the annual rental income a property produces, expressed as a percentage of its value or purchase price. It is the core measure landlords and investors use to compare properties and to judge whether the rent justifies the price paid. Across the UK, gross rental yields average around 5.6%, according to Zoopla's rental market data, though returns vary widely by region and property type.

Gross yield, net yield and cash-on-cash return

Three versions of the figure matter. Gross yield divides annual rent by the property value and multiplies by 100. It is a quick screen that ignores costs. Net yield first deducts running costs such as management, insurance, safety certificates and an allowance for void periods, which gives a truer picture of what a property earns. Cash-on-cash return measures annual pre-tax cash flow against the cash actually invested, which is the figure that matters most on a mortgaged buy-to-let. From working with self-managing landlords across the UK, we see that net yield, not the headline gross figure, is the number that reliably predicts whether a property performs.

What is a good rental yield?

As a broad UK benchmark, a gross yield of 5% to 8% is considered solid, and anything above 6% is strong. Lower-priced northern regions such as the North East and parts of Scotland tend to produce the highest yields, while London and the South East sit lower, with the trade-off of stronger capital growth. Higher-yielding strategies such as letting an HMO by the room can push gross yields into double figures, though they carry more management and licensing. For a full regional breakdown and a worked calculation, see our guide to how rental yield is calculated and compared.

How landlords use rental yield

Yield is most useful as a comparison tool. It lets very different properties be ranked on a like-for-like basis before other factors, such as capital growth potential, tenant demand and void risk, are weighed. Landlords managing a buy-to-let portfolio in one place track actual income and costs per property, which shows the real net yield a property delivers rather than the figure projected at purchase. To model gross yield, net yield and cash-on-cash return on a specific property, use the August rental yield calculator.

Frequently asked questions

Is rental yield calculated on gross or net? 

Both. Gross yield is a quick screen that ignores costs, while net yield deducts running costs to show what a property actually earns. Serious comparisons between properties use net yield.

What is the difference between rental yield and return on investment? 

Yield measures annual income against the property's value. Return on investment, including cash-on-cash return, measures the return against the cash you have actually invested, so it reflects the effect of any mortgage. A property can show a modest yield but a strong cash-on-cash return once leverage is taken into account.

What is a good net rental yield in the UK? 

A net yield of around 5% is a common minimum for a standard single let, though the right figure depends on your strategy, financing and location. Higher-yielding property types and regions can exceed this, usually in exchange for more active management.