Rental yield calculator
Powered by data from Molo • Last updated September 2023
Use the rental yield calculator to calculate both the gross yield and the average monthly rent. Compare the results with your chosen locations*
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Rental yield is an important factor to consider when purchasing a buy-to-let property. It allows you to understand how much you can expect to earn from your investment.
When looking into a buy-to-let mortgage, lenders have specific criteria, such as an Interest Coverage Ratio, that you need to meet, and the size of the loan they offer depends on the property’s rental income.
The rental income and yield go hand in hand – the higher the yield, the better your returns in most cases. You’d want the monthly rent to satisfy the lender’s criteria, as well as provide you with an income each month that makes the investment worthwhile.
Our rental yield calculator offers a fast and easy way for you to discover the viability of a property, whether it’s a current investment or potential buy-to-let.
How to use our rental yield calculator
The rental yield calculator and map is designed to help you discover rental yields across locations in England and Wales, so you can better understand the returns on your property investment.
Molo uses data based on Nomenclature of Territorial Units for Statistics 3 (NUTs) 3, which encompasses approximately 174 regions in England and Wales. The data covers regions and boroughs as opposed to specific neighbourhoods or postcodes.
For instance, you can discover yields for the London Borough of Chelsea and Kensington or the Borough of Hammersmith, rather than a single postcode.
Explore the map and discover areas across England and Wales with the highest and lowest rental yields. The different coloured pins display the rental yield levels ( red is a high yield, white is a low yield).
Find out which areas offer the best chance to make a high return.
Select the ‘gross yield’ option then enter the value of your property and your monthly rental income to reveal the current gross rental yield.
You can also compare the yield of your property to the average yield in different locations. Simply enter your information into the calculator on the left-hand side, then navigate through the different pins on the map.
If your gross yield is higher than the average in the location selected, the ‘gross yield’ box will display in red.
Switch to the ‘monthly rent’ section in order to find out the monthly rent that you should charge to reach your targeted gross yield.
Then, simply input the property’s purchase price, taking into account additional costs like stamp duty and your desired gross yield.
What is rental yield?
Before you invest in a buy-to-let property, you’ll want to get an idea of how much rental profit you can earn.
These are the factors you should take into account when deciding how much rent to charge, as it will affect your rental yield. You can use our calculator to determine how much rent you need to reach your target yield.
Gross Rental yield is the percentage of profit you can expect to achieve, based on the cost of the property and your rental income before any additional expenses, such as maintenance and stamp duty.
Net rental yield is the amount left after factoring in expenses.
What is a good rental yield?
A good yield on your buy-to-let property depends on a variety of factors, particularly the location you choose to invest in. Our research shows the average rental yield for England and Wales stands at 4.98%, meaning a good rental yield will generally sit slightly above this.
To earn a good rental yield, it’s best to make an investment in an area with a high demand for rental properties and a growth in house prices.
CEO at Molo, Francesca Carlesi explains, “From a rental yield perspective, areas to target at the moment include locations in the north of the country (with low property prices and high rental prices), as well as commuter cities (with a high demand for properties). However, it’s important to also consider fast growing cities or university areas which will allow a steady stream of tenants and have strong capital investment growth.”
A good rental yield will also depend on the type of property you invest in, so make sure you choose the right buy to let property.
How can I increase my rental yield?
There are a few factors worth considering once you’ve invested in a buy-to-let property in your preferred location. You always run the risk of having to carry out emergency repairs on your property, which is why it’s a good idea to cover yourself with a landlord’s insurance policy (make sure you take this additional expense into account).
There might also come a time when you struggle to secure tenants. Maximising the property’s ROI will allow you to mitigate some of the financial risk brought on by unforeseen circumstances.
Here are a few ways to go about it:
Increasing rental income is the best way to increase yield, but you need to give tenants a reason to pay the rent you’ve attributed to the property.
Larger investments can help tenants save money in the long-run in terms of gas and electricity bills, so they may be more willing to pay an increased rental price. However, it’s important to note that you can’t increase the rent at will and must abide by the terms set in the rental agreement with the tenant.
If you are expecting a void period, why not take advantage of the empty property to renovate or add extra rooms? That way, you’ll make the property more attractive and improve rental value and therefore rental yield.
There will always be a need for maintenance and repairs, but you can get more value for your money by investing in good work that saves you more in the long run.
When unforeseen issues arise, be sure to deal with them quickly. Putting repairs off could lead you to paying higher amounts if the issue worsens over time.
While there’s always a chance your property may need repairs, there are actions you can take to avoid experiencing too many problems.
Your tenants will be the ones using the property the most, which is why you want to make sure you get the right ones in. Investing in a letting agent helps ensure that all the referencing and checks have been done correctly, and that security deposits have been secured for potential damages.
“Landlords can widen the potential tenant pool to include tenants with pets, for example, or even consider letting the property as furnished,” says Mark Michaelides.
“Avoiding long void periods is also important, but some void periods should be factored into any expected yield calculation.”
Take a step towards purchasing a buy-to-let property by applying for a buy-to-let mortgage today!
*Averages were found in each location by using internal data
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*Averages were found in each location by using internal data