What Is Rental Yield?

Rental yield shows the annual rental income generated by a property as a percentage of its purchase price or current market value. It is commonly used by landlords and property investors to compare the potential income returns of different buy-to-let properties.

Our rental yield calculator uses your estimated property value, rental income and costs to calculate both gross and net rental yield. The results are estimates only and should not be treated as financial or investment advice, or used as a substitute for an accurate rental valuation.

Gross vs Net Rental Yield

Gross rental yield measures the annual rent before any costs are deducted. It is calculated by dividing the annual rental income by the property's purchase price or value and multiplying the result by 100. This is the figure most commonly quoted when investment properties are advertised.

Net rental yield provides a more detailed estimate by taking relevant costs into account. These may include letting and management fees, insurance, maintenance, service charges, ground rent and anticipated periods when the property may be vacant. Depending on how the calculator is configured, purchase costs may also be included.

Because these expenses can significantly affect the income produced by a property, net yield will normally be lower than gross yield and may provide a more realistic basis for comparing potential investments.

What Is a Good Rental Yield?

There is no single rental yield percentage that is suitable for every property. A good yield will depend on the location, property type, purchase price, expected rent, financing costs, condition and level of management required. Your investment objectives and attitude to risk will also be important.

A higher yield may indicate stronger potential rental income, but it can also be associated with greater maintenance, management or letting risks. A lower-yielding property may still appeal to an investor where there is reliable tenant demand, lower anticipated costs or potential for long-term capital growth.

Student properties and houses in multiple occupation can sometimes produce higher gross yields than conventional single-household rentals. However, they may also involve additional management, utility, licensing, maintenance and compliance costs. For this reason, properties should be compared using realistic net figures rather than gross yield alone.

Rental Yields in Loughborough

Rental yields in Loughborough vary considerably between neighbourhoods and property types. Factors such as proximity to Loughborough University, access to the town centre, local employment, transport links, property condition and tenant demand can all influence both rental value and purchase price.

Before purchasing a buy-to-let property in Loughborough, landlords should obtain an accurate rental valuation and allow for all likely running costs, periods without rent and any necessary improvement or compliance work.