12th June 2025

What is a good rental yield in the UK?

If you’re a landlord, or hoping to become a landlord, and you want to maximise the return on your investment to turn a profit, there are several elements to consider. One of those elements is rental yield. By calculating rental yields across towns and cities in the UK, you can make a data-based decision on where is best to buy. If you already own property, calculating your rental yield can also act as a convenient benchmark which you can use to compare the performance of a property against potential new investments in different areas.

To make it even easier, we’ll break down what exactly the rental yield is, how to calculate it, and highlight some of the best rental yields across cities in the UK. However, you will need to take into account other factors such as running costs and agency fees to get a clearer financial picture.

What does rental yield refer to exactly?

To break it down, rental yield is the return made on a property investment in terms of monthly rent charged (income) compared to the initial value and running costs (outgoings) of the property. A rental yield is essential not only for landlords to establish worthy investments, but also for lenders to assess whether they are likely to give you a buy-to-let mortgage if you’re not making a cash purchase.

What is a good rental yield?

Your return will depend on the location of your property as well as your expenditures, so to answer this question definitively is a little tricky. As a general rule to give you a rough idea of what to expect, a rental yield of anything above 6% is considered a very good yield for a buy-to-let property, and 4-5% is considered good. Some areas, particularly in the North & Scotland have yields upwards of 8%. However, we do not advise purchasing a property based solely on the prospect of a high rental yield. Other factors you’ll need to consider are profitability when you come to sell later on, attractiveness to potential tenants, and can the yield cover the running costs and mortgage repayments, if this is your chosen financing route?

Of course, you’ll also need to consider your own financial position in relation to the yield, do you need it solely to make a profit or will you need to retain some of the profit to build an emergency fund and cover any periods where the building may be unoccupied?

What is the average rental yield in the UK?

According to the data given by Fleet Mortgages for all regions of England in Q1 in 2025, the average rental yield is 7.41%. Of course, this may change through the year and depending on the market, but this is a good indication. With that being said, while this is useful to know to give you a general idea of the overall property market, this isn’t necessarily a good frame of reference for your own property. It would be prudent to check the average for the region or country you wish to purchase in (as Wales, Northern Ireland and Scotland were excluded from this data). Check the table below for a more accurate guideline:

Rank	City	Avg. Property Value (RightMove)	Avg. Rent PCM (Home.co.uk)	Avg. Annual Rent	Yield %
1	Edinburgh	£337,680	£2,186	£26,232	7.76%
2	London	£679,655	£4,037	£48,444	7.12%
3	Manchester	£272,051	£1,598	£19,176	7.04%
4	Leeds	£282,654	£1,679	£20,148	7.12%
5	Nottingham	£264,275	£1,489	£17,868	6.76%
6	Plymouth	£215,000	£1,203	£14,436	6.71%
7	Newcastle upon Tyne	£232,302	£1,275	£15,300	6.58%
8	Bristol	£392,390	£2,010	£24,120	6.14%
9	Stoke-on-Trent	£160,542	£800	£9,600	5.97%
10	Birmingham	£250,920	£1,214	£14,568	5.80%
11	Portsmouth	£278,806	£1,349	£16,188	5.80%
12	Liverpool	£217,612	£1,051	£12,612	5.79%
13	Cardiff	£301,311	£1,441	£17,292	5.73%
14	Wolverhampton	£235,483	£1,115	£13,380	5.68%
15	Aberdeen	£186,912	£875	£10,500	5.61%
16	Southampton	£287,495	£1,318	£15,816	5.50%
17	Gloucester	£282,605	£1,292	£15,504	5.48%
18	Hull	£166,132	£740	£8,880	5.34%
19	Lancaster	£216,508	£933	£11,196	5.17%
20	Brighton	£491,049	£2,084	£25,008	5.09%
21	Sunderland	£180,405	£757	£9,084	5.03%
22	Bradford	£193,886	£786	£9,432	4.86%
23	Wakefield	£212,704	£854	£10,248	4.81%
24	Chester	£302,677	£1,147	£13,764	4.54%
25	York	£319,237	£1,177	£14,124	4.42%
26	Leicester	£280,107	£1,031	£12,372	4.41%
27	Derby	£240,638	£876	£10,512	4.36%
28	Sheffield	£259,663	£915	£10,980	4.22%

How to calculate rental yield

To work out your rental yield, there’s a simple formula that you can use to get a percentage. You first need to know the annual rental income as well as the price paid for the property. To get the figure, divide the annual rental income by the price paid and multiply this number by 100 to get a percentage. For example, on a property that cost £230,000 with a monthly asking rent of £800:

£800 x 12 = £9,600

£9,600 / £230,000 = 0.041

0.041 x 100 = 4.1%

The rental yield is 4.1%

This calculation gives you your gross rental yield, but does not take into account any extra expenses. You will need to add extra calculations to your research to understand if the property is a worthwhile addition to your investment portfolio. To illustrate these costs, we can take a look at some national averages that might need to be considered in your calculations, assuming that tenants pay their own bills:

Stamp Duty Land Tax – for a property of this value, 5% for the first £25,000 of property value and 7% for the remainder
Monthly letting agency fees – usually 10% of your rental income
Average monthly mortgage payment – £800
Maintenance/emergency fund – recommended to have 1% of the property value in funds

When applied to the above example:

Stamp duty = £13,600
Monthly letting agency fees = £80
Average monthly mortgage = £800
Maintenance fund = £2,300

Total = £16,780

The stamp duty will only need to be paid once, and the maintenance fund may not be used regularly, but these are important factors to consider when thinking about your yield. Even with only the average mortgage and letting agency fees, which total £738 a month, this is a significant amount that your yield will need to cover. Of course, this may be lower if you’re a cash buyer with no mortgage to pay.

Realistically, the idea of a good rental yield is quite subjective as it depends on what you’d like to get out of your property investments. Many investors aren’t looking to make a huge profit from the rent itself, but from the capital growth when selling, and so they’re happy if their yield covers all running costs, mortgage payments, and fees with a small amount of income left over to build an emergency fund for maintenance. Then there are others who want to do the opposite of this long-term strategy and make extra income in the short term – which requires a higher yield.

This is an extremely long-term strategy that requires careful budgeting. However, if you’re looking to make extra income in the shorter term, then your property will need a higher yield to ensure that the aforementioned costs are covered, as well as bringing in a good amount of extra disposable income.

As with any investment, there are risks, and it isn’t as black and white as looking at rental yield. Sometimes, higher yields will have higher risks as they can be more affected by market conditions or tenant quality. Yet, alternatively, high rental yields may be reflective of an increase in demand. Therefore, it is important that the area is thoroughly researched and accounted for in your calculations.

Enhance your property portfolio with SDL Property Auctions

If you’re looking for the next addition to your portfolio, browse through our range of properties online and calculate potential returns so that you can make an informed choice. Look through our Timed Auctions to start your bidding, or keep up to date with property auction events if you have a specific lot or time frame in mind.