What is Rental Yield?
Rental yield is the annual return on a property investment expressed as a percentage of the property's value. Gross yield is the annual rent divided by the property value. Net yield accounts for all running costs including insurance, maintenance, agent fees and management costs.
Average UK Rental Yields 2025
| Region | Average Gross Yield |
|---|---|
| North East England | 7–9% |
| Scotland | 6–8% |
| Yorkshire & Humber | 5–7% |
| North West England | 5–7% |
| Midlands | 4–6% |
| London | 3–5% |
| South East | 3–5% |
Buy-to-Let Tax Changes
Landlords can no longer deduct mortgage interest directly from rental income. Instead, a 20% tax credit is available. This means higher-rate taxpayers pay significantly more tax on rental income than before. Stamp Duty carries a 5% surcharge on second homes and buy-to-let properties.
Void Periods
Most buy-to-let calculations assume full occupancy, but you should budget for void periods (time without a tenant). Industry averages suggest allowing for 3–4 weeks void per year. Factor this into your net yield calculation.