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Rental Yield Explained

By in Landlord with 0 Comments

Blog by Christine Foley 14th December 2018

property to let in Carlisle
What will be my rental yield on my buy-to-let property?

If you are going to be discussing the prospect of a buy-to-let mortgage with a mortgage broker you will need to have a good idea of the likely rental yield of the property which you are considering purchasing.

Your rental yield is calculated by dividing the amount you’ve paid to buy the property by the amount you are anticipating on receiving in yearly rent.

To  demonstrate this simply: take the example of paying £100,000 for a house, receiving £200 weekly in rent, then your annual rental rate would be £10,400- meaning that your yield would be 10.4%: 100,000 divided by 10, 400.

This would be your ‘gross yield’, but of course you always need to bear in mind that owning property involves maintenance costs, and costs associated with the whole process of finding a tenant. 

This ‘gross yield’ figure also doesn’t take into account any period when you might not have a tenant, and therefore have no rent coming in- although we can help you to arrange insurance to cover these periods.

So, when you’re doing the maths on this, it’s a good idea to try to calculate the ‘net yield’- in other words, what your rental property is likely to earn you in rent over the year, minus realistic costs- this way you’re more likely to arrive at a meaningful figure.

If you would like some expert advice on the likely annual rental yield of a prospective letting property in the Carlisle area, feel free to contact us for some free advice- just complete the contact form or give us a ring- we’re always happy to help.

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