Rental Yield Explained 2026

Q: What is a good rental yield in the UK?

A gross rental yield of 5–8% is generally considered good in the UK. Net yields (after all running costs) are typically 2–4% lower. London properties often yield 3–4% gross due to high purchase prices, while northern cities like Manchester, Leeds and Liverpool regularly achieve 6–9% gross. What counts as "good" also depends on your financing costs and tax position.

Q: Should I calculate yield on purchase price or current value?

Both are useful for different purposes. Yield on purchase price (cost yield) shows your actual return on capital deployed. Yield on current market value shows whether the property still represents value versus alternatives — useful when deciding whether to sell or keep. Most investors track both.

Q: What costs reduce net yield?

Key costs that reduce net yield from gross include: letting agent fees (8–15% of rent), void periods (typically 3–5 weeks/year), maintenance and repairs (1–2% of property value/year), buildings and landlord insurance (£300–£600/year), ground rent and service charges (leasehold properties), and any utility bills paid by the landlord.

Q: Does mortgage affect yield calculation?

Technically, yield is calculated on the property value — not your equity. Mortgage payments are not included in yield calculations. Yield measures the return on the asset; cash-on-cash return measures the return on your invested equity (deposit + purchase costs). Both metrics matter — use our Buy-to-Let Calculator to see cash-on-cash return alongside yield.

Q: How do HMOs affect rental yield?

Houses in Multiple Occupation (HMOs) typically generate 30–50% higher rental income than single-let properties of the same size — because you're renting individual rooms at a premium. Gross yields of 8–12% are achievable. However, HMOs have higher running costs (utilities, more wear and tear), stricter licensing requirements and are more management-intensive.

What rental yield actually means, how to calculate gross and net yield, what a good yield looks like, and the UK cities delivering the strongest returns right now.

Calculate your property's gross and net yield instantly:

Rental Yield Calculator →

What Is Rental Yield?

Rental yield is the annual rental income from a property expressed as a percentage of its value. It's the most widely used metric for comparing the income-generating potential of investment properties — equivalent to the "interest rate" on your property investment.

Gross Yield vs Net Yield

Metric	Formula	Includes	Use For
Gross Yield	(Annual rent ÷ Property value) × 100	Rent only	Quick comparison
Net Yield	((Annual rent − Costs) ÷ Property value) × 100	Rent minus all running costs	True return analysis

Worked Example: £200,000 property, £1,000/month rent

Annual rent: £12,000
Gross yield: 12,000 ÷ 200,000 × 100 = 6.0%
Agent fees (10%): £1,100
Void period (3 weeks): £577
Maintenance: £1,500
Insurance: £400
Total costs: £3,577
Net income: £12,000 − £3,577 = £8,423
Net yield: 8,423 ÷ 200,000 × 100 = 4.2%

What's a Good Rental Yield?

Gross Yield	Assessment	Typically Found In
8%+	⭐⭐⭐⭐⭐ Excellent	Liverpool, some northern cities, HMOs
6–8%	⭐⭐⭐⭐ Good	Manchester, Leeds, Sheffield, Birmingham
5–6%	⭐⭐⭐ Average	Bristol, Edinburgh, outer London
4–5%	⭐⭐ Below average	London zones 2–4, prime commuter belt
<4%	⭐ Poor (income)	Prime London, prime Home Counties

Low-yield properties in prime areas are typically "capital growth plays" — investors accept lower income in exchange for stronger price appreciation prospects. Neither strategy is wrong — it depends on your investment goals.

UK Rental Yield Map: Cities Ranked (2026)

City	Avg House Price	Avg Monthly Rent	Gross Yield
Liverpool	£170,000	£1,050	7.4%
Manchester	£215,000	£1,200	6.7%
Leeds	£220,000	£1,150	6.3%
Sheffield	£195,000	£950	5.8%
Birmingham	£230,000	£1,100	5.7%
Bristol	£340,000	£1,500	5.3%
London (outer)	£450,000	£1,900	5.1%
London (central)	£650,000	£2,400	4.4%

FAQs

What is a good rental yield in the UK?+

A gross rental yield of 5–8% is generally considered good in the UK. Net yields (after all running costs) are typically 2–4% lower. London properties often yield 3–4% gross due to high purchase prices, while northern cities like Manchester, Leeds and Liverpool regularly achieve 6–9% gross. What counts as "good" also depends on your financing costs and tax position.

Should I calculate yield on purchase price or current value?+

Both are useful for different purposes. Yield on purchase price (cost yield) shows your actual return on capital deployed. Yield on current market value shows whether the property still represents value versus alternatives — useful when deciding whether to sell or keep. Most investors track both.

What costs reduce net yield?+

Key costs that reduce net yield from gross include: letting agent fees (8–15% of rent), void periods (typically 3–5 weeks/year), maintenance and repairs (1–2% of property value/year), buildings and landlord insurance (£300–£600/year), ground rent and service charges (leasehold properties), and any utility bills paid by the landlord.

Does mortgage affect yield calculation?+

Technically, yield is calculated on the property value — not your equity. Mortgage payments are not included in yield calculations. Yield measures the return on the asset; cash-on-cash return measures the return on your invested equity (deposit + purchase costs). Both metrics matter — use our Buy-to-Let Calculator to see cash-on-cash return alongside yield.

How do HMOs affect rental yield?+

Houses in Multiple Occupation (HMOs) typically generate 30–50% higher rental income than single-let properties of the same size — because you're renting individual rooms at a premium. Gross yields of 8–12% are achievable. However, HMOs have higher running costs (utilities, more wear and tear), stricter licensing requirements and are more management-intensive.

Calculate gross and net yield for any property:

Yield Calculator → Full BTL Analysis →

⚠️ Yield figures are based on averages and estimates. Actual returns vary significantly by specific property, location and management. Not investment advice. Last updated May 2026.