How to find the best rental yields in 2021

Rental yield is the term used to describe the returns that a buy-to-let investor can expect to achieve via rental income each year, expressed as a percentage of the property value.

Having an informed understanding of how rental yield works is vital when it comes to purchasing a buy-to-let investment. Rental yield is one of two main sources of income from a buy-to-let investment - the other being capital growth, which is the profit made when the value of a property increases.

When considering an investment, a sensible first step is to using our Local Data or Valuation tools to estimate the likely rental return on the property, and then use our rental yield calculator to understand what that represents as a gross yield.

Calculating gross rental yield

Calculating UK rental yield as a percentage is relatively simple. To find out your existing or potential rental yield, all you need to do is divide the annual rental income of your property by the amount of money you have invested in it. This figure should then be multiplied by 100.

For example, if you purchased a property for £200,000, and the annual rental income for the property was £12,000, this would equate to a gross rental yield of 6%. 

If you would like to quickly calculate your rental yield, why not use our free PropertyData rental yield calculator tool?

Net vs gross: calculate net rental yield

Gross rental yield is your return before any expenses, whereas net rental yield takes expenses into account. Your costs will vary considerably depending on your individual investment.

Unless you’re an outright cash buyer, your mortgage interest rate will be your biggest expenditure, and you should aim to cover this with rental income with margin to spare.

You'll also need to factor in things like letting agent fees and home insurance.

Last but not least, maintenance and service costs, such as renovating a property or replacing/repairing the boiler or white goods should be factored into your finances from the offset.

When these expenses are taken into account, it’s easy to see why achieving a good gross rental yield is so important. The gross rental yield needs to cover all these costs, and leave enough profit at the end of the month for you as the landlord.

What is considered a good rental yield in the UK?

The average rental yield in the UK sits at around 3.5%, so anything above this can be considered good.

Rental yields vary considerably from location to location, so choosing an area with higher-than-average yields can be an important part of boosting your returns as a buy-to-let property investor.

There are lots of different factors that can impact rental yields, including location, demand for housing, distance from local amenities, crime rates and more.

Finding relatively affordable properties in areas where demand is high or increasing is often a good way to get a good rental yield.

Where is the best rental yield in the UK?

The average rental yields for long-let tenancies by region are:

  • North West: 4.7%
  • Yorkshire: 4.6%
  • Scotland: 4.5%
  • Wales: 4.3%
  • West Mids: 3.9%
  • East Mids: 3.8%
  • South West: 3.7%
  • North East: 3.5%
  • South East: 3.3%
  • East: 3.4%
  • London: 2.8%

Of course these are large regions, and it's better to get more specific. Have a look at our Yield Hotspots data, updated daily to show the postcode districts in the UK where rental yields are highest.

And while location is the most important factor for UK rental yields, it is not the only one. It is still possible to achieve high rental yields in areas of regional underperformance like London, whereas some landlords might struggle to achieve a good return in high-demand areas of Liverpool. This is why market research is such an important factor.

What happens to rental yields in the UK during a recession?

Rental prices, which are instead largely dictated by the demand for housing, are generally more resilient than property prices.

Therefore rental yields can actually rise during a recession. For example, during the last financial crisis back in 2008, rents dropped by just 2% in comparison to property prices, which fell by almost 20%, boosting rental yields.

While the current pandemic and uncertainty surrounding Brexit might pose challenges, history has taught us that rental prices tend to weather the storm. 

Rental yield UK: make the right investment

At PropertyData, we’re here to ensure investors make informed property decisions. When it comes to rental yields, our tools allow you to make better decisions by providing Local Data and highlighting rental yield hotspots.

To find out for yourself, why not try PropertyData for free - or alternatively, check out our tutorials for further information on how to maximise your investment potential today.

Sign up to PropertyData for free

How PropertyData can help you

I'm an investor I'm a developer I'm an agent

Limit reached

Sorry, you've reached your monthly search limit. Upgrade your account today for more searches!

Upgrade

Upgrade to download PDFs

There are many places in PropertyData to export data as well-formatted PDF files, including Local Data, Plot Map, Valuations, property reports and more.

Basic


No PDFs

Pro


Download PDFs

Max


Download PDFs


Branded PDFs

Start your free trial now

Transparent data promise

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How often is the data updated?

The data is updated in near real-time.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

What are the statistics used?

Averages shown are the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How do you know the square footage of properties?

We use proprietary technology to read the square footage of properties from agent floorplans. Although we cannot determine the square footage for all properties, we can usually get sufficient coverage. Agents are sometimes known to inflate square footage, and this should be borne in mind as a weakness of this data.

How often is the data updated?

The data is updated in near real-time.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property "price paid" data provided by the Land Registry.

How often is the data updated?

Once per month when released by the Land Registry, typically towards the end of each calendar month covering up to the end of the previous calendar month.

What time period does the data cover?

You can customise the time period using the filter at the top of the view. The default time period is up to 9 months back from today's date. The latest data covers the period up to 2022-03-31, although some sales that took place before this date may still be added in the coming months.

How is the raw data processed?

No additional processes are applied to this data.

What are the statistics used?

Averages shown are the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property "price paid" data provided by the Land Registry, and Energy Performance Certificate (EPC) data provided by Ministry of Housing, Communities & Local Government.

How do you know the square footage of properties?

We match the Land Registry data to EPC data provided by the MCHLG. Due to the fact that not all properties sold have had an EPC and vagaries of addressing in the UK, we are not able to determine the square footage of all properties, but we can usually get sufficient coverage.

How often is the data updated?

The private paid data is updated once per month when released by the Land Registry, typically towards the end of each calendar month covering up to the end of the previous calendar month. The energy performance certificate database is updated monthly.

What time period does the data cover?

You can customise the time period using the filter at the top of the view. The default time period is up to 9 months back from today's date. The latest data covers the period up to 2022-03-31, although some sales that took place before this date may still be added in the coming months.

How is the raw data processed?

No additional processes are applied to this data.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How often is the data updated?

The data is updated in near real-time.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Room let listings on SpareRoom, the UK's biggest room letting website.

How often is the data updated?

The data is updated in near real-time.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from SpareRoom, they are soon removed from this tab.

How is the raw data processed?

Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How often is the data updated?

The data is updated in near real-time.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded. Yields are calculated by comparing only properties with the same number of bedrooms, e.g. 3-bedroom properties for rent with 3-bedroom properties for sale.

What is the yield calculation used?

The calculation used is (average_weekly_asking_rent * 52 / average_asking_price), expressed as a percentage. It is a top-line gross yield, meaning no expenses are considered.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How often is the data updated?

The data is updated in near real-time.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from Zoopla, Rightmove or Spareroom, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Yields are calculated by comparing only properties with the same number of bedrooms, e.g. 3-bedroom properties for rent with 3-bedroom properties for sale. For the SpareRoom data, hypothetical properties consisting of two to six average double rooms with shared bathrooms are used to derived average rent. For all sources, listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

What is the yield calculation used?

The calculation used is (average_weekly_asking_rent * 52 / average_asking_price), expressed as a percentage. It is a top-line gross yield, meaning no expenses are considered.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property "price paid" data provided by the Land Registry.

How often is the data updated?

Once per month when released by the Land Registry, typically towards the end of each calendar month covering up to the end of the previous calendar month.

Zoopla Zed-index

What time period does the data cover?

The data covers transactions in the last six years

How is the raw data processed?

No additional processes are applied to this data.

What are the statistics used?

The average shown is the interquartile mean, a type of average that is insensitive to outliers while being its own distinct parameter. The 80% range means that 80% of the listed properties fall inside this range.

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How often is the data updated?

The listings data is updated in near real-time. The Land Registry data is updated once per month when released, typically towards the end of each calendar month covering up to the end of the previous calendar month.

What time period does the data cover?

The price paid data shown goes back to January 2015. The listings data is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

What are the calculations used?

Average sales per month are for the last 3 finalised months. Turnover is average sales per month divided by total for sale. Inventory is 100 divided by turnover.

Where does the raw data come from?

Property listings seen on rightmove.co.uk, zoopla.co.uk and onthemarket.com.

How often is the data updated?

The listings data is updated in near real-time. The Land Registry data is updated once per month when released, typically towards the end of each calendar month covering up to the end of the previous calendar month.

What time period does the data cover?

This is a real-time market snapshot - the data covers currently listed properties. Once properties are removed from the portal, they are soon removed from this tab.

How is the raw data processed?

Duplicates from multiple sources are matched and reconciled as far as possible. Listings with obvious errors, where price or number or bedrooms appear out of range, are discarded.

Where does the raw data come from?

We receive data on the extent and corporate ownership of all land titles in England & Wales from the Land Registry.

How often is the data updated?

The data is updated once per month when released, typically in the first few days of each calendar month.

What time period does the data cover?

This is an ownership snapshot - the data represents ownership as recorded by the Land Registry at the last monthly export.

How is the raw data processed?

No additional processes are applied to this data.

Where does the raw data come from?

We source different expert forecasts Savills, Knight Frank, OBR

How often is the data updated?

The data is updated annually when new forecasts are released, typically towards the beginning of the year.

How is the raw data processed?

We calculate a consensus forecast using a simple mean average.