🏘️ A gross yield of 5–8% is generally considered good for UK buy-to-let. Net yield after all costs, tax and mortgage is typically significantly lower. Always factor in void periods.
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 2026
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.
Frequently Asked Questions
There's no single answer — it depends on location and strategy. As a rough guide, many investors look for gross yields above 5–6% to comfortably cover costs, though yields vary hugely by region, with parts of the North of England often outperforming London on this measure while London offers stronger long-term capital growth.
Gross yield is annual rent divided by property value, ignoring costs. Net yield subtracts running costs (letting agent fees, maintenance, insurance, ground rent, void periods) before dividing by property value — net yield gives a more realistic picture of actual return.
Landlords can no longer deduct mortgage interest directly from rental income before calculating tax. Instead, they receive a 20% tax credit on mortgage interest paid, applied after the tax calculation — this means higher and additional rate taxpayers effectively get less relief than under the old system.
Yes. Buy-to-let and second home purchases in England and Northern Ireland attract a 5% Stamp Duty surcharge on top of standard rates at every band — use our Stamp Duty Calculator to see the exact figure.
A void period is any time your property sits empty between tenants, earning no rent while you still pay the mortgage, insurance and other costs. Even a single month of void per year meaningfully reduces your actual annual yield compared to the figure assuming full occupancy.