Answers · UK 2025/26

What counts as a good rental yield on a UK buy-to-let?

A gross rental yield of 5% to 8% is generally considered good. On a GBP 200,000 property let at GBP 1,000 a month (GBP 12,000 a year), the gross yield is 6%. Net yield after costs is usually 2 to 3 percentage points lower.

Last updated: 10 June 2026Last reviewed: 10 June 2026How we verify

Full answer

Rental yield measures annual rent as a percentage of the property's value, and it is the headline metric for comparing buy-to-let investments. Gross yield = (annual rent / property price) x 100. Worked example: a GBP 200,000 property rented at GBP 1,000 a month produces GBP 12,000 a year, a gross yield of 6%. As a rule of thumb, 5% to 8% gross is considered healthy in much of the UK; northern cities often beat southern ones because prices are lower relative to rents. But gross yield ignores costs. Net yield deducts letting agent fees (often 10 to 15% of rent), insurance, maintenance, void periods, ground rent and service charges. On the same property, GBP 3,000 of annual costs cuts net rent to GBP 9,000, a net yield of 4.5%. You then have Income Tax on the profit at your marginal rate (20%, 40% or 45%), and remember mortgage interest only attracts a 20% tax credit rather than full relief for individual landlords. Don't forget the upfront 5% SDLT additional-property surcharge in England and Northern Ireland and, on eventual sale, Capital Gains Tax at 18% or 24% on residential gains above the GBP 3,000 annual exempt amount. A high yield with low capital growth, or vice versa, may both make sense depending on your goal. Use the rental yield calculator to compare properties and the buy-to-let calculator to model the full picture. See gov.uk for landlord tax rules.