1. What is Rent-to-Value Ratio?

The Rent-to-Value Ratio (RTV) is a key metric used by UK property investors to assess the rental yield potential of a property. It compares the annual rental income to the property's market value, expressed as a percentage.

2. How Does the Calculator Work?

The calculator uses the Rent-to-Value Ratio formula:

Where:

• Annual Rent — Total yearly rental income in GBP
• Property Value — Current market value of the property in GBP

Explanation: The ratio shows what percentage of the property's value you earn back each year in rent.

3. Importance of Rent-to-Value Ratio

Details: In the UK property market, a higher RTV generally indicates better rental yield. Typical ratios range from 3-8% depending on location and property type.

4. Using the Calculator

Tips: Enter the annual rental income and property value in GBP. Both values must be positive numbers. The calculator will compute the percentage ratio.

5. Frequently Asked Questions (FAQ)

Q1: What is a good Rent-to-Value Ratio in the UK?
A: Generally, 5% or higher is considered good, though this varies by region. London properties typically have lower ratios (3-5%) than northern cities (5-8%).

Q2: How does RTV differ from rental yield?
A: RTV is a simplified yield calculation that doesn't account for expenses. Gross rental yield would include additional factors.

Q3: Should I use purchase price or current value?
A: For ongoing assessment, use current market value. For initial investment analysis, use purchase price.

Q4: How often should I calculate this ratio?
A: Recalculate annually or when rental prices or property values significantly change.

Q5: Does this work for commercial properties?
A: Yes, but commercial properties often have different valuation methods and typical ratio ranges.