On the lookout for profitable properties with good rental yields in the UK? Here at Mistoria Group, we have decades of experience helping our clients reap the rewards of high-yield property investment.
Regardless of whether you’ve already amassed an impressive portfolio or are considering investing in your very first buy-to-let property, knowing what a good ROI (Return on Investment) looks like in the UK is essential to increasing your rental yield.
To help you get the best value for your money, we explain what’s meant by a ‘rental yield’ and why this figure is important.
We also explore what good rental yields in the UK look like and discover how property location, housing market demand, property prices, interest rates, and inflation can affect yours.
What is a rental yield?
Rental yield is calculated by dividing the annual rental income of a property by its value to create a percentage figure (the initial purchase price and any improvements should also be included in the property’s value).
This figure indicates the potential returns (or ROI) that can be obtained by renting out the property and gives investors an idea of how financially viable a property investment is likely to be.
What is a good rental yield in the UK?
According to statistics provided by Track Capital, the average rental yield in the UK is 3.63 per cent.
Based on this information, any rental yield above this could be considered ‘good’. However, a ‘good’ rental yield in the UK will naturally vary depending on the location, type, and size of the investment property.
By way of illustrating, in Liverpool alone, the city centre (L1) can achieve fantastic rental yields of 10 per cent. On the other hand, Liverpool postcodes such as L2, L3, and L4 tend to deliver lower, but still comparatively good rental yields of between seven and eight per cent, highlighting the importance of location even within the same city.
Similarly, the type of property investment can also affect an investor’s yield.
A student property or HMO (House of Multiple Occupation), for example, is more likely to generate a higher yield than a residential buy-to-let property. According to Paragon Bank, student property investors were enjoying yields between 13 and 18 per cent above the Private Rented Sector (PRS) over a five-year period.
The same research explains that during this period, student properties delivered “a mean gross yield in England of between 6.15 and 6.6 per cent”. This shows a significantly greater yield when compared to the overall rental market that varied between 5.43 and 5.6 per cent.
As you might expect, the size of the investment property will also affect the rental yield.
Naturally, an HMO with three bedrooms will be able to house three separate households or individuals, while a six-bedroom property can accommodate twice as many, effectively doubling your gross rental income.
It’s also important to bear in mind that even the best rental yields in the UK can be significantly affected by a variety of factors including government policies, housing market demand, interest rates, property prices, and inflation. Buying the right size and type of investment property in the ideal area is therefore essential to achieving a good rental yield.
Ultimately, what might be considered a good rental yield for one property in the UK, could be considered average or even below average for another.
As a result, we always recommend seeking expert advice from property investment professionals before deciding which property is the best investment opportunity for you.
Explore high yield property investments at Mistoria Group
Operating in Liverpool, Manchester, Salford, and Bolton, our expert team is on hand to support clients across the length and breadth of the North West of England.
Here at Mistoria Group, you’ll receive specialist guidance from our team of chartered accountants, experienced estate agents, and expert property investors. Thanks to more than 100 years of property investment experience, you can rest assured you’ll be in safe hands – regardless of whether you’re searching for your first high-yield property investment or moving onto your next lucrative property investment venture.
If you’d like to find out more about rental yields in the UK or already have your eye on your next buy-to-let, we can help.
To speak to a member of our friendly team today, give us a call on 0800 500 3015.
Once we’ve received your enquiry, we’llensure a member of our team gets back to your shortly!