If you are thinking of investing in property you are probably looking for one of two things: a regular income (rental yield) or for the value of the property you buy to increase over a period of time (capital growth). Over time there may even be a combination of both.<\/p>\n\n\n\n
Quite simply, rental yield is the return you are making, or expect to make, on a property you own or are thinking about purchasing.<\/p>\n\n\n\n
Property investors and landlords use rental yield as a means to monitor the value of their property investments and portfolios.<\/p>\n\n\n\n
To calculate rental yield you will need to know the purchase price of the property, or a current market value, and the annual rental income that you expect to receive.<\/p>\n\n\n\n
Take the annual rental income amount and divide it by the property value\/purchase price. To convert this figure to a percentage, you simply then need to multiply this by 100. This percentage is your rental yield.<\/p>\n\n\n\n
\nFor example, for a new property purchase it might look like this\u2026\u2026Annual rental income<\/strong>: \u00a36,000 Purchase price:<\/strong> \u00a3100,000 = 6% yield<\/strong><\/p>\n<\/blockquote>\n\n\n\n
Remember, you are taking the annual rental income, dividing it by the property\u2019s purchase price or value, then multiplying by 100 to get your percentage.<\/p>\n\n\n\n
What is the difference between gross and net yields?<\/h2>\n\n\n\n
A gross yield is when you take rental income as a percentage of the property value, as in the example above.<\/p>\n\n\n\n
With a net yield, you also need to take into account any other costs you may have such as insurance, mortgage payments or maintenance.<\/p>\n\n\n\n
Regional differences<\/h2>\n\n\n\n
Property prices and average rents are different for each town, city and region meaning that yields will vary across the UK.<\/p>\n\n\n\n
This means that the yield for a property in Norwich will most likely not be the same as the yield for a property in Durham, so it\u2019s important you factor this in when doing any calculations.<\/p>\n\n\n\n
If you\u2019re keen to keep an eye on property prices, check out our monthly House Price Index<\/a> report which monitors property asking prices in England and Wales. We also publish a quarterly Rental Trends Tracker<\/a> which monitors property rental prices around the UK.<\/p>\n\n\n\n
Capital Growth<\/h2>\n\n\n\n
Capital growth, also known as capital appreciation, is the amount your property or portfolio of properties increases, or decreases, in value over time.<\/p>\n\n\n\n
For example,<\/p>\n\n\n\n
Purchase price \u00a3100,000
Current value \u00a3125,000
Capital growth \u00a325,000<\/p>\n\n\n\nThere are many factors that can affect property prices in a given area on top of general market supply and demand for housing. If there are plans for regeneration, new infrastructure, transport links or investment in an area this can have a positive effect on future prices.
<\/p>\n","protected":false},"excerpt":{"rendered":"If you are thinking of investing in property you are probably looking for one of two things: a regular income (rental yield) or for the value of the property you buy to increase over a period of time (capital growth). Over time there may even be a combination of both. What is rental yield? Quite […]<\/p>\n","protected":false},"author":13,"featured_media":0,"parent":1264,"menu_order":84,"comment_status":"open","ping_status":"open","template":"","meta":{"_acf_changed":false,"footnotes":""},"class_list":["post-783","page","type-page","status-publish","hentry"],"acf":{"author_profile":[]},"yoast_head":"\n
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