1. What is Rental Yield?

Rental yield is a percentage figure that shows how much of an income return a property is generating relative to its value. It's a key metric for property investors to assess the profitability of a rental property.

2. How Does the Calculator Work?

The calculator uses the rental yield formula:

Where:

• Monthly Rent — Expected monthly rental income in GBP
• Property Value — Current market value or purchase price of the property in GBP

Explanation: The equation calculates the annual rental income (monthly rent × 12) as a percentage of the property value.

3. Importance of Rental Yield Calculation

Details: Rental yield helps investors compare different property investments, assess potential returns, and make informed decisions about property purchases.

4. Using the Calculator

Tips: Enter the expected monthly rent in GBP and the property value in GBP. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a good rental yield in the UK?
A: Generally, 5-8% is considered good, with yields varying by location. London typically has lower yields (3-5%) while northern cities may offer higher yields (7-10%).

Q2: Should I use purchase price or current value?
A: For investment analysis, use the purchase price. For portfolio assessment, use current market value.

Q3: Does this include expenses?
A: No, this is gross yield. Net yield would deduct expenses like maintenance, insurance, and management fees.

Q4: How does rental yield differ from ROI?
A: Rental yield shows income return only, while ROI (Return on Investment) considers both income and capital appreciation.

Q5: Should I only consider high-yield properties?
A: Not necessarily. High yields often come with higher risks or lower capital growth potential. Balance is key.