Average rental yield UK

According to research from Inventory Base, the estimated average rental yield in the UK stands at 3.74%. Rents in the UK have increased drastically over the last few years as more and more people are in need of rental property. This demand is a result of many factors, one of which is the house price growth in the UK. House prices are rising at a rapid pace at the moment, pricing many people out of making the leap into homeownership and resulting in more and more people relying on rental property.

However, attitudes towards renting are constantly changing and there are now many who choose to rent a property as opposed to buying, thanks to the flexible lifestyle on offer with a rental property. All of these factors are coming together and putting pressure on the rental market, forcing rents to rise and, in turn, rental yields to do so as well.

What does rental yield mean?

A rental yield is the return-on-investment per year expressed as a percentage. The two types of yields you will receive are gross yields and NET yields.

What is the difference between NET yields and gross yields?

In simple terms, gross yield is the value of your returns before you deduct all associated costs and a NET yield is the value when all the associated costs have been deducted.

How do I calculate gross and NET yields?

Working out gross and NET yields are very straight forward. To work out gross yields, you simply have to divide the gross annual rent by the value of the property and times it by a hundred. To work out the NET yield, you have to do the same but also consider any deductions from the annual rent (i.e. ground rent, service charge etc).

What does it mean by ‘assured NET yields’?

Assured NET yields are a rental guarantee that developers offer landlords for a specified fixed period (usually for one year, two years or five years). This means that rental income will be guaranteed on the property for the specified period, regardless of whether the property is tenanted or not.

What is a good rental yield in the UK?

The current average rental yield in the UK is between 3-4% NET, so anything above this would be considered good. Higher yields can usually be found in Northern cities like Manchester, Liverpool and Sheffield.

Rental market statistics

3.74%: The estimated average rental yield in the UK is 3.74% (Inventory Base, 2021)
1.8%: The UK annual private rental price growth rose by 1.8% in the 12 months to December 2021 (ONS, 2022)
£969: Renters are now paying on average £969 per month (Zoopla, 2022)
12.6%: Rental values in the UK are forecast to increase by an impressive 12.6% in the 2022-2026 period. (JLL, 2021)