Franchise security

A beginner’s guide to property yields

You may have heard people talk about property yield but what does this mean?

It is a way of measuring the rental potential of a property and is the amount of rent that can be earned in a year for the landlord. This amount is expressed as a percentage of the price of the house.

So, if a rental income of £10,000 was earned from a house costing £200,000, the yield would be 5%. It’s helpful to use a percentage because it better enables comparison between different properties, so that landlords can assess which would earn them the most. For example, a £10,000 income on a £160,000 house represents a rental yield of 6.25%, demonstrating greater value than the previous property.

Many factors impact upon property yield and the larger or more expensive houses don’t necessarily offer higher returns. Landlords can achieve a high yield in areas where there is a shortage of properties, a strong demand due to special amenities, such as a university nearby, close proximity to good schools, a strong local economy, good road or rail infrastructure or even a young population who aren’t yet ready to buy property.

Managing Director of Redstones, Manjit Virdi says, “Not every property will get you a great yield. For our various regions, our staff are equipped with excellent local knowledge and can advise landlords or potential landlords on which properties will generate them the best yield for their budget.”

He continues, “However, to make the right property investments, it’s important to look at potential capital growth as well as property yields to ensure you benefit from any future increases in both rents and property values.”

A professional lettings agent such as Redstones will advise you on how to succeed as a landlord, offering valuable local knowledge on targeted areas. Due diligence is the key and we can help you assess rental amounts in advance, so that you can calculate your all-important return on investment.

Here are some of the many reasons landlords choose to rely on Redstones.

Leave a Reply

Your email address will not be published. Required fields are marked *