How to calculate rental yield
Rental yield tells you how much rent a property earns each year as a percentage of what it cost. There are two versions, and it matters which one you are being quoted.
- Gross rental yield = annual rent ÷ purchase price × 100. A £200,000 apartment let at £1,150 a month earns £13,800 a year, a gross yield of 6.9%.
- Net rental yield = (annual rent − annual running costs) ÷ purchase price × 100. With £2,400 a year of service charge, management and voids, the same apartment has a net yield of 5.7%.
Running costs usually include service charge, ground rent where it applies, letting and management fees, insurance, maintenance and an allowance for empty periods. Stamp duty and legal fees are one off purchase costs and are not part of the yield calculation; our buy to let calculator includes them in the cash you need.
What is a good rental yield in the UK?
It depends on the city and the type of property. Across all property types, city wide gross yields on ONS price and rent data range from about 4.9% in London to 6.5% in Manchester:
| City | City wide gross yield | Average monthly rent | Average price |
|---|---|---|---|
| Manchester | 6.5% | £1,373 | £252,000 |
| Liverpool | 5.8% | £913 | £189,000 |
| Birmingham | 5.6% | £1,099 | £234,000 |
| Leeds | 5.5% | £1,145 | £248,000 |
| Sheffield | 5.1% | £931 | £220,000 |
| London | 4.9% | £2,332 | £569,000 |
Prices and annual growth: ONS and HM Land Registry UK House Price Index, July 2026 (provisional). Rents: ONS Price Index of Private Rents, August 2026. Forecasts: Savills revised five year mainstream forecast, June 2026. City wide yields are gross, derived from ONS average price and average rent across all property types, so they are not directly comparable with yields on individual apartment schemes. Figures are indicative and capital is at risk.
City centre apartments often quote higher gross yields than these averages. Treat a figure well above the local average as a reason to ask whether the rent is achieved on a signed tenancy or estimated, and whether it is a long let or short let figure. Our guide to the best places to invest in UK property in 2026 compares the six cities in more detail, and our article on rental yield calculation for buy to let works through more examples.
Frequently asked questions
How do I calculate rental yield?
Gross rental yield is the annual rent divided by the purchase price, multiplied by 100. Net rental yield takes your annual running costs off the rent first. For example, a £200,000 apartment let at £1,150 a month earns £13,800 a year, a gross yield of 6.9%. With £2,400 a year of service charge, management and voids, the net yield is 5.7%.
What is the difference between gross and net yield?
Gross yield uses the rent before any costs. Net yield deducts the costs of owning and letting the property, such as service charge, ground rent, letting and management fees, insurance, maintenance and empty periods. Net yield is the better guide to what you actually earn, and is usually one to two percentage points below gross.
What is a good rental yield in the UK?
Across all property types, city wide gross yields range from about 4.9% in London to 6.5% in Manchester on ONS price and rent data. Many investors look for 5% to 7% gross on a city centre apartment. Treat any figure well above the local average as a reason to ask how the rent was worked out.
Does rental yield include the mortgage?
No. Yield measures rent against the price of the property, whether you pay cash or borrow. To see the effect of a mortgage, look at cash flow after mortgage interest and the return on the cash you put in, which this calculator also shows.
What is return on cash invested?
It is your annual cash flow after costs and mortgage interest, divided by the deposit you put in. Because a mortgage lets you buy with a fraction of the price, the return on your cash can be higher than the yield, but borrowing also magnifies losses if rents fall or rates rise.
