The definition of rental yield or property yield is the return you make – or expect to make – on a property you either own or are thinking about purchasing.

Property investors and landlords use rental yield to measure the value of their investments as they want to know the return on their capital outlay, so they can ensure that your rental income is sufficient for their investment

How to Calculate Rental Yield for UK Properties

To work out rental yield you apply this simple rental yield formula:

Rental yield = (Monthly rental income x 12) ÷ Property value

We’ve broken down how you use this formula to calculate rental yield below:

• Take the monthly rental income amount or expected rental income and multiply it by 12
• Divide it by the property’s purchase price or current market value
• Multiply this figure by 100 to get the percentage

Example:

• Your monthly rental income is: £1,300
• Your annual rental income is: £1,300 x 12 = £15,600
• You purchased the property for: £250,000
• Your rental yield is: (£15,600 ÷ £250,000) x 100 = 6.24% 

The rental yield calculator enables you to enter a range of costs associated with the acquisition of a buy to let property such as purchase price and legal fees in order to see the potential return on your investment.

Please remember that it is just a guide and it's always best to talk this through with one of our qualified Financial Services advisers by contacting us at Richmond Holmes.

Rental Yield Calculator