Rental Yield Advice

In terms of ongoing costs, as a landlord you will have to foot the bill for any maintenance as well as potential emergency expenses such as replacing a broken boiler. You may also have to pay letting agent fees when acquiring new tenants and there may be void periods to deal with, when the property is empty. In many cases, though, buy-to-let investors are happy if their rental income covers these expenses – as well as the cost of borrowing on a mortgage*, if necessary – with perhaps a little extra income to spare every month, given that they will also hope to receive the long term benefit of house price growth.

What is a good rental yield ?

As a rule of thumb, between 6% and 8% is considered to be a reasonable level of rental yield, but different parts of the country can deliver significantly higher or lower returns.

It is worth bearing in mind that yields can be lower in areas where the expected house price growth is highest, such as in London and the South East of England. This is because the potential for capital gains in the region pushes sale prices up, while rent levels are less affected.