Investing in property remains a popular way to gain a revenue stream, whether it’s your sole source of income, a smart side hustle or a pension replacement.
Not all buy-to-lets are equal, however, and there’s one calculation landlords must know when working out the best financial proposition: yield
Your rental yield shows your rental income as a percentage of the buy-to-let’s purchase price.
How to work out a yield
Working out the yield for different investment properties illustrates which buy-to-let has the most potential, and which doesn’t make financial sense.
There are two types of yield that landlords should work out: gross yield and net yield. With both, you can use the property’s purchase price or the property’s current value, if you’ve owned it for a while.
-
When working out a yield for a brand new investment, it’s best to use the purchase price.
-
Landlords who already own a buy-to-let should use the property’s current value when working out ongoing viability.
Gross yield
Your gross yield is your rental income against the price of your property before your running expenses have been deducted.
How to calculate your gross yield
-
Multiply your monthly rent by 12 to get your annual income
-
Divide that annual income by the property's purchase price
-
Multiply the result by 100 to get a percentage
Example: £1,500 monthly rent × 12 = £18,000. Divide by a £250,000 property price = 0.072. Multiply by 100 = 7.2% gross yield
Net yield
Your net yield is your rental income against the price of your property after your running expenses have been deducted.
How to calculate your net yield
-
Multiply your monthly rent by 12 to get your annual income
-
Subtract annual expenses like maintenance, service charges, ground rent, insurance and management fees
-
Divide this figure by the property's purchase price
-
Multiply the result by 100 to get a percentage
Example: £1,500 monthly rent × 12 = £18,000. Subtract £2,300 annual expenses = £15,700. Divide by a £250,000 property price = 0.063. Multiply by 100 = 6.28% gross yield
What is a good yield?
In the UK, a viable yield is considered anything between 5% and 8%. Around 6% is a good yield, with anything above 7% very good. Yields can vary as they are directly linked to how much rent you can charge. When rental values fall, the yield will also decrease.
Your yield will also change if the property’s price fluctuates over time. Your yield will decrease if the value falls, while your yield will increase if the property rises in value.
Why does yield matter to landlords?
The higher the yield percentage, the more income will be generated. A low yield may mean you struggle to cover the cost of operating a buy-to-let. A very low yield may even leave you out of pocket, especially if costs such as service charges start rising or you encounter bills you haven’t budgeted for.
A yield that’s more than 6% will also give you a financial buffer, should you need to spend money on repairs, one-off maintenance and perhaps a void period.
Finally, while lenders usually work out buy-to-let mortgage affordability by looking for rental income that covers at least 125%-145% of the mortgage payments, they will feel more confident loaning money if the yield is good.
What is the UK’s average rental yield?
Fleet Mortgages' latest Buy-to-Let Rental Barometer revealed average rental yields across England and Wales increased 0.3%, when comparing Q2 2026 with Q2 2025. The average yield in England and Wales is currently 7.8%.
Where are the best yields in the UK?
Landlords looking for the very best yields in England should look north. The best yields can be found in the North East (9.2%), followed by the North West (8.8%). Yields in Yorkshire & Humberside, Wales, and both the East and West Midlands remain above 8%. Zoopla found Sunderland is the best English city for yields (9.3%), followed by Burnley (8.2%) and Middlesborough (8.1%).
The average yield in Scotland is 7.6%, according to Zoopla’s latest figures. Looking at regional variations, the very best yields are in East Ayrshire (10%), Renfrewshire (9.5%) and West Dunbartonshire (9.2%). The best performing Scottish cities are Aberdeen (8.3%), Dundee (8.1%) and Glasgow (7.8%).
If you are considering becoming a landlord, ask us to work out the gross yield of some sample properties. We can use your budget and current rental values to identify the best investment for you.
Share this article
Sign up for our newsletter
Subscribe to receive the latest property market information to your inbox, full of market knowledge and tips for your home.
You may unsubscribe at any time. See our Privacy Policy.
