What is a good rental yield in the UK – Guide for 2025

If you're an American considering buying an investment property in the UK, you're probably wondering how much money you can make from renting it out.

Rental yield gives you that answer. It's the percentage that shows how much rental income you earn each year compared to the property's market value.

So, what is a good yield on a rental property in the UK? Generally speaking, a rental yield between 5% and 8% is solid in most parts of the country.¹

However, there are important nuances to consider when choosing a UK property investment and figuring out how it compares to opportunities back home. Here's everything you need to know.

Investing in UK-based property. What are the pros?

The UK has a strong rental market with a lot of demand. In 2025, there are more than 15 inquiries for every home to rent, and rents typically rise faster than house prices (which means higher yields for landlords).²

In addition to the strong rental demand, there are a few other advantages to consider:

• No foreign ownership restrictions: The UK allows Americans to buy property without special permits or citizenship requirements (this is not the case for all countries)
• Established rental market: The UK has good rental platforms and property management services, which make it easier to find tenants and manage your investment remotely
• Currency diversification: Owning a UK property gives you exposure to GBP, which can hedge against USD fluctuations
• English-speaking market: Dealing with tenants, agents, and legal matters is easier when you share the same language

Overall, an investment property in the UK can be a great way to diversify your real estate portfolio internationally.

What is rental yield & why is it an important factor for international investors?

Rental yield measures how much income your property generates compared to its value. There are 2 types you need to understand:

• Gross rental yield takes your total annual rent and divides it by the property's value. It gives you a quick snapshot of potential returns, but it doesn't account for expenses
• Net rental yield is more realistic because it subtracts all your expenses first, such as paying for property management, insurance, maintenance, and repairs

Several factors influence your rental yields, such as:

• Location: Properties near universities, business districts, or transport hubs typically rent for higher amounts and have less vacancy time
• Property condition: Newer properties command higher rents, but older ones might offer better initial yields (though they often require more frequent and expensive repairs)
• Local rental regulations: Rent control laws and tenant protection rules can limit how much you can charge tenants or make it harder to evict problem renters
• Seasonal demand: Tourist areas might generate excellent income during peak months, but sit empty during off-seasons

Rental yield calculations are estimates, so take them with a grain of salt. Your actual profits might be influenced by factors like unexpected vacancy periods and repairs.

However, calculating yields gives you a solid foundation for comparing investment opportunities and setting expectations.

Regions & areas with the highest rental yield in the UK in 2025

The average gross rental yield in the UK currently sits at 5.60%, according to Zoopla.²

If you're wondering what a good rental yield percentage is in the UK, it's typically between 5% and 8%, but some regions deliver higher or lower returns than this range.¹

Here are the top 20 UK cities ranked by gross rental yield.

These city averages are useful benchmarks, but your real-life rental yield will ultimately depend on the specific property you choose. A studio apartment in a busy area might deliver higher yields than a luxury penthouse in a more remote neighborhood, for example.

Pro tips for UK property investors for 2025

Have clear goals

Before you start hunting for properties, decide exactly what you want to achieve with your UK investment. If you had to choose, would you prioritize a steady monthly income or long-term capital appreciation? Do you want a hands-off investment, or are you willing to actively manage tenants?

Rental yield is important, but it's not the only factor that matters.

A property with a lower yield might still be the right choice if it's in an area with strong appreciation potential or reliable tenant demand. Similarly, a high-yield property in a declining neighborhood might look good on paper but could become difficult to rent or sell later.

Consider HMOs

Houses in Multiple Occupation (HMOs) are properties rented to multiple tenants who share common areas like kitchens and bathrooms. These can be profitable investments. For example, student HMOs often deliver gross yields of 12% or higher.⁴

However, HMOs require more active management than single-family rentals.

Pay attention to transfer fees

When you're ready to buy, transferring a large payment from the US to the UK can cost you a lot of money in fees and currency exchange markups.

In addition to the regular fees for processing your transfer, banks often make money through poor exchange rates that can cost you 3% to 4% of your total transfer amount.

For example, if you're sending 200,000 USD for a property purchase, a bank might charge you an exchange rate that's 4% worse than the mid-market rate. That "hidden" markup costs you a whopping 8,000 USD, which could've gone toward your down payment instead.

How to calculate rental yield on UK-based property

Here's how to do both gross and net calculations with simple examples.

Let's say you buy a property in Liverpool for 150,000 GBP and rent it for 950 GBP per month. Your annual rental income is 11,400 GBP. In this scenario, your gross rental yield is 7.6% (11,400 GBP ÷ 150,000 GBP × 100).

However, this example doesn't take expenses into account. You might make an annual rental income of 11,400 GBP and spend a large chunk of it on maintenance, HOA fees, and property management, which brings your ROI down.

This is why it's also important to estimate your net rental yield.

Using the same Liverpool property, subtract your annual expenses:

• Property management fees: 1,140 GBP
• Insurance: 300 GBP
• Maintenance and repairs: 800 GBP
• Letting agent fees: 400 GBP
• Total expenses: 2,640 GBP

Your net rental income is 8,760 GBP, and your net rental yield is 5.8%. The difference between gross (7.6%) and net (5.8%) yield shows why it's important to account for both.

UK property investment can offer solid returns for American investors, with the average gross rental yield currently sitting at 5.60%.²

If you've been Googling, "What is a good yield on a rental property in the UK?", the answer is that anything between 5% and 8% is a good ROI.¹

However, you also need to take into consideration other factors beyond rental yields, such as whether the property is likely to appreciate.

It's also important to remember that transferring money from the US to the UK for property purchases can eat into your profits through bank fees and currency exchange rate markups.

With Wise, you can send secure and trackable large amount transfers to 140+ countries worldwide with transparent fees and the fair mid-market exchange rate.

Have a look at the main benefits for using Wise to send large transfers:

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Sources

1. Provestor - Best UK rental yield hotspots for 2024
2. Zoopla - The highest yielding areas for buy-to-let property in the UK
3. Numbeo - Property prices in United Kingdom
4. Property Investments UK - Free rental yield calculator