How to work out Rental Yield return on your Buy-to-Let Investment
The main objective of buy-to-let investing is often generating passive income. This is measured by rental yield, which is rental return as a percentage of the price the property is purchased for. You can easily work out the return on your buy-to-let investment with our rental yield calculator.
Rental yield is a key metric for measuring a successful buy-to-let investment and can also be used for calculating the affordability of a buy-to-let mortgage.
However, remember that rental yield may not be the only factor by which you measure an investment, capital appreciation is also an important revenue stream and can be an important measure in a more short-term investment strategy.
Working out the rental yield for your property is fairly easy. Firstly, find your annual rental income for the property and divide that by the property value. Finally, multiply the result by 100 to get the percentage.
As an example equation, consider the following:
Annual rental income = £12,000 \ Property value = £200,000 x 100 = 6%
This gets more complicated when you’re trying to work out the rental yield for a property that isn’t purchased or even built. In this case, you’ll want to consider the past performance of property in a similar area or in the immediate surroundings, taking into account new developments and amenities nearby.
Download Net/Gross Rental Yield Spreadsheet
Download to use the rental yield spreadsheet.
Best Places for Rental Yields in the UK
Looking to find the best location in the UK for rental yields? We’ve got you covered.
With research we carried out using data from both Nationwide and Zoopla, here is the top performing places in the UK for rental yields.
Just remember, while rental yields are a key metric to measure, they’re not the only thing you should be considering – tenant demand and retention is just as important to ensure a well-rounded investment.
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Best Places for Rental Yields in the UK
Looking to find the best location in the UK for rental yields? We’ve got you covered.
With research we carried out using data from both Nationwide and Zoopla, here is the top performing places in the UK for rental yields.
Just remember, while rental yields are a key metric to measure, they’re not the only thing you should be considering – tenant demand and retention is just as important to ensure a well-rounded investment.
Read More
Net Vs. Gross Rental Yields
Gross yield = (weekly rental x 52) – property value x 100
Net yield = (weekly rental x 52) – costs / property value x 100
Net and Gross rental yields are widely affected by a number of costs of being a landlord. See Fig.1.0 for the average split of costs a typical landlord incurs.
Rental Yield vs Capital Appreciation
Whether you’re a first time investor or a seasoned professional, understanding your investment strategy is vital.
While some investors will be looking for short-term capital growth, others may be looking for a long-term investment focused on rental yields.
Discover which strategy is right for your financial goals and how you can get started building the returns you need today.
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Expected Rental Yields across the UK
Interested in Buy-to-Let investment in the UK? You’ll want to read our blog on expected rental yields across the UK.
Learn more about which areas are delivering the best rental yields, what makes a good rental yield and how you can calculate your own rental yield going forward.
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Top Pick: Birmingham Rental Yields
As one of the most exciting destinations in the UK, Birmingham is our top pick as a rental yield hotspot.
With a mix of affordability and rising rental prices, Birmingham has laid the foundations for incredible yields going forward.
Learn more about this vibrant city and the upcoming developments that are set to ensure it’s a major force in the rental market going forward.
Read More
- Best Places for Rental Yields in the UK
- Net Vs. Gross Rental Yields
- Rental Yield vs Capital Appreciation
- Expected Rental Yields across the UK
- Top Pick: Birmingham Rental Yields
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