Rental Yield

Rental yield is the return on a property investment from rental income alone, expressed as a percentage of the property's value. It is the primary metric for comparing income potential across different properties and markets.

The two main forms are gross yield (before costs) and net yield (after running costs). Gross yield is used for quick initial comparisons. Net yield is the figure that matters for actual cashflow assessment.

Yield is inversely related to capital values in most property markets. Areas with the highest yields (northern cities, post-industrial towns) typically have lower absolute property prices and slower historical capital growth. Areas with the lowest yields (London, south-east England) have high prices and have historically relied on capital growth rather than income for returns.

Typical rental yield ranges by UK region (2026): Newcastle/Sunderland/Bradford/Sheffield 7-9%, Midlands 6-7%, Manchester/Liverpool 5-7%, Bristol 4-6%, London 3-5%.

When comparing yields across properties or areas, ensure you are using the same basis: gross vs gross, or net vs net. Mixing gross and net yields makes comparisons meaningless.