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Market & Property
£
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Annual Income
£
Before vacancy and any deductions
%
£
Parking, storage etc.
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Operating Expenses (Annual)
£
£
£
£
If paid by landlord
£
Accounting, legal, licences
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Investment Analysis
Cap Rate
0.00%
Net Operating Income (NOI)
£0
Effective Gross Income
£0
Total Operating Expenses
£0
Expense Ratio
0%
Implied Value (at market rate)
£0
Your Cap Rate Rating
—
NOI vs Market Benchmarks
Income vs Expenses
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Cap Rate Benchmarks by Market & Property Type (2026)
| Market | Residential | HMO/Multi-Let | Commercial |
|---|---|---|---|
| 🇬🇧 UK North (Liverpool/Manchester) | 6–8% | 8–12% | 7–10% |
| 🇬🇧 UK Midlands | 5–7% | 7–10% | 6–9% |
| 🇬🇧 London (outer) | 4–6% | 6–9% | 5–7% |
| 🇬🇧 London (central/prime) | 2.5–4% | 4–7% | 4–6% |
| 🇺🇸 US Sunbelt (Texas/Florida) | 6–9% | 7–11% | 6–9% |
| 🇺🇸 US Gateway (NYC/LA/SF) | 3–5% | 4–7% | 4–6% |
| 🇨🇦 Canada (Toronto/Vancouver) | 3–5% | 5–8% | 4–7% |
| 🇦🇺 Australia (Sydney/Melbourne) | 3–5% | 5–8% | 5–8% |
FAQs
What is a cap rate?+
Cap rate (capitalisation rate) is a metric used by property investors to evaluate the potential return of an investment property. It's calculated as: Cap Rate = Net Operating Income (NOI) ÷ Property Value × 100. It shows the unleveraged return on a property — what you'd earn if you bought it in cash.
What is a good cap rate?+
A good cap rate depends on the market and property type. In the UK, residential property typically yields 4–8% cap rate; commercial property 5–10%. In the US, 5–10% is typical for residential; Class A commercial in major cities is often 4–6%. Higher cap rates mean higher returns but often higher risk.
What is Net Operating Income (NOI)?+
NOI is your annual rental income minus all operating expenses — but before mortgage payments and tax. Operating expenses include management fees, maintenance, insurance, property taxes, and vacancy allowance. NOI is the foundation of all investment property valuation.
What is the difference between cap rate and yield?+
Gross yield = annual rent ÷ property value × 100. Net yield deducts operating costs. Cap rate is similar to net yield but specifically designed for investment analysis and uses NOI (which may include property taxes and vacancy). Cap rates are more commonly used in commercial property; yield is more common in UK residential BTL analysis.
How do I use cap rate to value a property?+
If you know the NOI and the market cap rate for similar properties, you can reverse-calculate value: Property Value = NOI ÷ Cap Rate. For example, if an office building generates £50,000 NOI and comparable properties sell at a 6% cap rate, the implied value is £50,000 ÷ 0.06 = £833,333. This is how commercial property is valued.
⚠️ Cap rates and benchmarks are indicative. Market conditions vary significantly by location and property type. This is not investment advice. Always consult a qualified property investment adviser.
