What is a Good Rental Yield on a Rental Property?

What is the Average Rental Yield in the UK?

The average rental yield in the UK is 3.63%. So, technically, anything over the average can be a higher rental yield.

However, bear in mind this figure is considering the whole UK, including areas like London where properties are disproportionately expensive compared with the rest of the country.

Where are the Best Rental Yields in the Country?

The best rental yields are in the North of the UK and in Scotland. East Ayshire currently has the highest rental yield of 8.48% with the average rent being £504 and average house price sitting at £71,334.

Other high rental yield areas include Glasgow, Middlesborough, and Sunderland. Check out our rental yield map for a glimpse at some of the best options in the country.

What are the Lowest Rental Yields in the Country?

The lowest rental yields in the country exist in the South where prices are substantially higher. As you can probably guess, places like Kensington and Chelsea have the lowest rental yields of 3.30%. The average rent here is £3,3221 and average house price is £1,171,159.

Despite the higher rents, the house prices bring down the yield. If you’re looking to invest in these areas, make sure you have plenty of properties to ensure you’re bringing in good cash flow.

How to Improve Your Rental Yield

There are quite a few ways you can increase your rental yield. Here’s a few below:

1) Invest in HMOs

HMO means House in Multiple Occupation and includes properties that have multiple people living in them, paying rent for their room. If you ever went to university, you probably lived in an HMO at some point.

As you’re renting per room opposed to the entire property, you can obtain a better rent overall. Some HMOs can be rented for £500/room. This means, if you have a 5-bed house, you could be generating £2,500/month in rent.

If you’re looking to improve your rental yield with HMOs, you can search HMOs for sale using our platform.

2) Invest in Student Properties

Student properties are just as lucrative when it comes to improving your improving your rental yield. They’re like HMOs (if not the same), as you’ll be renting out the property per room.

The difference with standard HMOs containing professionals is students are given money from Student Finance and will need a place to stay in the city where they’re university is based. Therefore, you’ll know for certain you’ll always have a steady flow of tenants that have the money to pay for the year.

The trouble here is you’ll have to find a good rental yield in a university city. Saying this, there are still plenty of options. Explore our platform for student properties for sale and improve your rental income quickly.

3) Refurb and Add Rooms

A good way to increase rental yield is by improving the property itself. If you’re unable to get an HMO or convert the property into an HMO (as this sometimes requires planning permission from the Council), a refurb could be a quick way to increase profits.

Either a quick re-paint or an entirely new extension could be options when hunting for greater profits. Things like more bathrooms and improved storage all cater to a higher rent. If you have more to offer, you’ll be able to charge more. Simple.

4) Allow Pets

Another simple way to increase rental yield is by allowing pets in your property. Only 5% of landlords allow pets. By giving the “all clear” for your properties, you become an exclusive renting option for people with animals.

Not only will this allow you to charge more for rent, but it’ll also attract individuals who are likely to be more professional. Couples and small families may all suddenly become interested in your properties. This, in turn, can therefore warrant a higher rent as these groups will have better incomes.

Summing it up

A good rental yield in the UK is between 5-8%. However, it can go much higher than that depending on where you invest in the country, what type of property you invest in, and how you plan on renovating the house/flat.

If you want to learn more about rental yield, see our knowledge centre. If high rental yield is your goal but don’t know where to start your search, check out our platform now.