The United Kingdom guide05 of 08
UK rental yields by city, and what they mean net.
Gross yields for eleven UK cities on the same ONS basis, how to turn a gross figure into a net return, and where the numbers hold up.
Almost every UK property investment site leads with a yield. Very few say whether it is gross or net, what costs were left out, or what price it was measured against. The difference is not academic. On the worked example below, an advertised 6.5% becomes 4.2% once the real costs of owning and letting the apartment are counted. That is still a sound return for a well-located asset; it is just not 6.5%. This guide shows how to get from one number to the other, and where in the UK the rent figures stand up to scrutiny.
What rental yields are UK cities achieving?
Most yield league tables mix sources, dates and property types. The table below uses one source for every city: the Office for National Statistics' local housing data, published on 16 September 2026, with prices for July 2026 and rents for August 2026. The yields are our calculation: a year's rent divided by the average price.
City | Average price | Average rent a month | Gross yield, all homes | Gross yield, flats |
|---|---|---|---|---|
Newcastle upon Tyne | £208,000 | £1,215 | 7.0% | 9.3% |
£252,000 | £1,373 | 6.5% | 7.1% | |
Bristol | £352,000 | £1,883 | 6.4% | 7.5% |
Nottingham | £190,000 | £1,014 | 6.4% | 8.1% |
Salford | £229,000 | £1,170 | 6.1% | 7.8% |
England | £293,000 | £1,459 | 6.0% | – |
£189,000 | £913 | 5.8% | 7.3% | |
£234,000 | £1,099 | 5.6% | 7.6% | |
£248,000 | £1,145 | 5.5% | 7.1% | |
Sheffield | £220,000 | £931 | 5.1% | 6.9% |
London | £569,000 | £2,332 | 4.9% | – |
Flat yields use the ONS average flat rent against the average flat price. ONS rounds prices to the nearest £1,000, and its rent and price series do not cover exactly the same homes, so read these as comparable indicators rather than the return on any one property.
Three things stand out. Flats out-yield the all-homes average in every city, because flats are cheap relative to the rents they command. Newcastle tops the table on yield, helped by low prices and a 9.3% rise in rents over the year. And London yields least, which is why most overseas income investors now look north.
Yield is only half of the decision, though. The next question is whether the rent and the resale market are deep enough to rely on.
What is the difference between gross and net yield?
Gross yield is the annual rent divided by the price. It ignores every cost of owning the property.
Net yield subtracts the running costs first: the service charge, letting and management fees, an allowance for empty periods, insurance and maintenance. A careful investor also measures it against the total cost of buying, including stamp duty and legal fees, not just the price.
Neither figure deducts mortgage interest or income tax, which depend on how you finance and your own tax position.
Rental yield and return · United Kingdom
Example inputs: change any of them. Growth is your assumption, not a forecast; it starts at nil.
An illustration before tax, not a forecast or advice. Rent, occupancy and costs vary by unit and season; we send the developer's figures for a specific property.
Worked example: from 6.5% gross to 4.2% net
This is an illustration of the method, not a forecast or a quote for any specific property. It assumes a £250,000 apartment let at £1,350 pcm, bought by a non-resident who already owns a home elsewhere.
Line | Amount | Notes |
|---|---|---|
Annual rent | £16,200 | £1,350 × 12 |
Gross yield on price | 6.5% | £16,200 ÷ £250,000 |
Service charge | −£1,625 | Building upkeep, insurance of the structure, reserve fund |
Letting and management, 12% | −£1,944 | Within the typical 10–15% range |
Voids, two weeks a year | −£623 | Time between tenancies |
Landlord insurance and maintenance | −£500 | Contents, liability, minor repairs |
Net operating income | £11,508 | |
Net yield on price | 4.6% | £11,508 ÷ £250,000 |
Stamp duty, non-resident additional property | £20,000 | 2% and 5% surcharges on top of standard rates |
Legal and purchase fees | £3,000 | Top of the typical range |
Total cost | £273,000 | |
Net yield on total cost | 4.2% | £11,508 ÷ £273,000 |
The 4.2% is the figure to compare against other investments. A UK resident buying the same apartment as an additional property would pay £15,000 stamp duty instead of £20,000, and their net yield on total cost would be slightly higher. Change any input in the rental yield calculator and run your own numbers.
Questions on this guide? Ask our United Kingdom team.
Ownership, costs and what is for sale, on WhatsApp or by phone.
Why do advertised yields look higher than this?
- Gross is presented as net. In the example above, running costs take 29% of the rent before any mortgage or tax.
- The stamp duty surcharge is left out. For a non-resident buying an additional property, it is 7% above standard rates on the whole price (GOV.UK).
- Rental guarantees inflate the headline. The guaranteed rent is often priced into the apartment.
- The rent is an asking rent, not an achieved one. Ask for evidence of rents actually agreed in the same or comparable buildings.
- The data is undated. A yield without a date and a source is a sales figure, not a fact.
What about yield after mortgage interest and tax?
Your cash return depends on financing and tax, which is why it is not shown in the example. Two changes matter. From April 2027, property income is taxed at 22%, 42% and 47%, and the credit for finance costs is given at 22% (Autumn Budget 2025). Higher-rate taxpayers with large mortgages see the biggest effect. If you borrow, check the rent passes the lender's interest coverage test with room to spare; see the mortgages and finance guide.
Keep this guide: get it as a PDF.
How do you check that a rent figure is realistic?
- Compare with ONS averages for the local authority, then adjust for the building's quality and location.
- Ask a local lettings agent, independent of the seller, for a written rental valuation.
- Look at achieved rents in comparable buildings, not portal asking prices.
- Count the competing supply completing nearby in the same year as yours.
How does the Renters' Rights Act change the numbers?
Since 1 May 2026 every private tenancy in England has been periodic, section 21 has gone and rent rises follow a once-a-year formal process. For a well-managed city-centre apartment the effect on yield is small: tenants tend to stay longer, which cuts voids. Our guide to the Renters' Rights Act for overseas landlords covers the detail.
Where do the numbers hold up?
A high gross yield is worth most where the rent is backed by deep, growing demand and the apartment can be resold to another investor without a long wait.
- Manchester sits second in the table and has one of the deepest city-centre rental and resale markets outside London. Its rents rose 4.2% over the year, Savills forecasts North West prices to rise 25% over the five years to 2030, and homes under construction in the city centre fell to 8,023 in 2026, the lowest since 2016 (Deloitte Crane Survey). That combination of yield, liquidity and a shrinking pipeline is why we treat it as the core UK holding.
- Newcastle yields more on paper, but its city-centre apartment market is smaller and less liquid. It suits investors comfortable with a thinner resale market.
- Liverpool has the lowest entry prices in the table and the fastest price growth over the year (+8.1%), with a lower yield than Manchester on this basis.
- Birmingham and Leeds yield less than Manchester on the ONS figures. Both have large professional economies and long regeneration programmes, so they suit a growth-led rather than income-led strategy.
- London offers the lowest yield in the table and falling prices over the year (−3.3%). It is a capital-preservation market, not an income one.
For the city we know best, Manchester rental yields shows how the figures change by neighbourhood and by building.
What can reduce your yield?
- New blocks completing nearby at the same time.
- Service charge increases, especially in buildings with extensive amenities.
- Longer voids if the apartment is priced above the market.
- Tax changes, including the April 2027 rise in property income tax.
Manchester rental yields · Costs and taxes · Property market outlook
Frequently asked questions
What is a good rental yield in the UK?
There is no single figure, because yield trades off against growth and risk. On the same ONS basis, gross yields run from 4.9% in London to 7.0% in Newcastle, with Manchester at 6.5% and England at 6.0% (September 2026 release). What matters is the net yield after service charge, management, voids and insurance, measured on your total cost including stamp duty.
How do you calculate rental yield?
Gross yield is annual rent divided by the purchase price, multiplied by 100. Net yield takes the annual rent, subtracts the running costs (service charge, letting and management fees, an allowance for voids, insurance and maintenance), and divides the result by the purchase price or, more honestly, by the total cost including stamp duty and legal fees. Neither figure includes mortgage interest or income tax.
Are rental guarantees worth having?
Treat them with caution. A guarantee is only as strong as the company giving it, and its cost is often built into the purchase price, so the guaranteed yield is partly your own money returned. When the guarantee ends, the rent resets to the market. Judge the apartment on the rent it would achieve without the guarantee, and read who pays the service charge during the guaranteed period.
Do studios yield more than two-bedroom apartments?
Smaller apartments often show a higher gross yield because rent does not fall in proportion to size. The gap narrows on a net basis: service charges are a larger share of a small apartment's rent, tenants in studios tend to move more often, and some lenders restrict very small units. Two-bedroom, two-bathroom layouts suit sharers and couples and are usually the most liquid on resale.
Does furnishing an apartment increase the rent?
In city-centre buy-to-let, furnished apartments are the norm, and an unfurnished unit can take longer to let rather than achieve less rent. A furniture pack is a one-off cost that wears out and needs replacing, so include it in your total cost. Ask your lettings agent which the local tenant market expects before you buy the pack.
Should I compare properties on yield or total return?
On both. Yield is the income return; total return adds capital growth. A higher-yielding apartment in a weaker location can produce a lower total return than a lower-yielding one where prices rise faster. Savills forecasts North West prices to rise 25.0% over five years against 18.5% for the UK (June 2026), but forecasts are not guarantees, so the income should stand on its own.
Part of our guide to investing in United Kingdom.
