Rental yields – everything Scottish landlords need to know
Tweet |
Tue 29 Mar 2022

For landlords, one of the most crucial aspects of your buy-to-let investment is your ability to generate a good rental yield.
Along with capital appreciation, rental yields are indicative of how much profit you could make in rental income and will determine whether you can cover the cost of your buy-to-let mortgage.
Whether you’re a seasoned landlord with years of experience, a new landlord getting to grips with your investment, or a prospective landlord considering your first foray into the buy-to-let market, it’s important to understand how rental yields work and what they mean for you.
Here, we put together a comprehensive guide on rental yields and how landlords in Scotland can achieve a good yield to see healthy returns on their buy-to-let investment.
Gross rental yield
Put simply, rental yield refers to the value of the rent you can expect to receive from your property on an annual basis, represented as a percentage. This can be calculated in two different ways: gross and net.
The gross yield identifies the basic overall figure before deducting your expenses. This is calculated by taking the yearly rental income of a property and dividing it by the property purchase price.
As an example, if your property costs £180,000 and you charge £9,000 per year in rent, you’d have a gross rental yield of 5%.
Net rental yield
The net yield, however, includes the costs associated with the property – such as maintenance, insurance, mortgage, etc. To calculate this, you take the annual rental income minus associated costs, then divide by the property value.
Off the back of the previous example, if the annual rent is £9,000 and the associated costs is £1,000, then the annual profit would be £8,000. Divide this by the property cost of £180,000, and the net rental yield becomes 4%.
For this reason, the net yield is more helpful as it allows you to discern where you could reduce costs to increase your yield.
How can you increase your rental yield?
With the market becoming increasingly competitive, landlords might find it more challenging to increase their rental yield. However, there are small measures you can take to improve your returns.
Review your asking rent: This decision should only be made after careful consideration, factoring in contractual agreements and your tenants’ financial situations.
Invest sensibly: Be mindful of the type of investment you’re going for. Do you prefer a newer property with less maintenance, or an older fixer-upper with greater risks?
Review your outgoings: This may sound obvious, but always keep on top of your spendings. Consider setting a reminder to research alternatives – there are always more cost-effective options.
Check your mortgage renewal: There are a variety of products on the market, so ensure you shop around thoroughly. Always be mindful about switching, as this can ramp up prices.
What is the average rental yield in Scotland?
Many elements go into determining a good rental yield, such as the price of the property, rental demand, and location. As a general rule, a yield between 5-8% is considered a good return.
Fortunately, landlords in Scotland can check all three boxes. Rental yields here average 7.50%, with some areas appearing in the top 25 UK postcodes for yields.
Although they fluctuate from region to region, Scotland sits comfortably among the upper echelons of healthy returns. In fact, it was home to five of the top 10 highest-yielding locations in the UK in 2020, with Zoopla estimating yields above 7.5%. This is reflected in Scotland’s resilient rental market, with February 2022 seeing a 12.1% increase in average rental values compared to 2021, at £760 a month.
In West Lothian, where we are based, the average rent increased 9.6% year-on-year between July and September 2021, to £789.
This is fuelled by rising tenant demand for two and three-bedroom homes in the area, which offers more affordable options for growing families and remote workers in need of extra space to accommodate a home office.
In essence, yields are one of the most crucial signposts for understanding the health of your investment. Therefore, having a strong grasp of how they work and what you can do to influence them will be the key to succeeding in the Scottish buy-to-let market.
Here at Letting Solutions, West Lothian’s first dedicated lettings agency, we can guide you through all aspects of the lettings journey and can help you to get the most from your rental properties as a result.
Please don’t hesitate to contact us, even if you are not a current client. You can ring us on 01506 496006 where our team are waiting to help. Or you can email us at: rent@letting-solutions.co.uk.
News Archive
June 2022
Green mortgages - should landlords be considering them?
Revealed - insider tips on becoming a successful landlord
Is rental reform in Scotland neglecting the needs of landlords?
Deposit protection schemes in Scotland - what do you need to know?
Now is a good time to be a Scottish landlord - here's why
March 2022
Rental yields – everything Scottish landlords need to know
Landlord Tips – how to stage your property to attract tenants
Landlords - how to attract tenants this spring
February 2022
A New Deal for Tenants – what are the Scottish Government’s plans all about?
January 2022
New fire safety regulations introduced – what do landlords need to know?
How to maintain your rental property this winter – the top tips
December 2021
Landlords – what are the top 7 most vital factors to consider before letting a property out?
Landlords – why you should list your property before the Christmas period
November 2021
What should landlords do about empty properties over Christmas?
Optimism on the rise – are the good times back for landlords?
October 2021
Electrical Standards - what Scottish landlords will need to know and do from next year
Scottish government announces grant for tenants in rent arrears - what do landlords need to know?
September 2021
Rent controls in Scotland – what do we know?
August 2021
Landlords - why summer is a great time to let a property
July 2021
Revealed - why landlords need to be aware of lighting changes
May 2021
Why it’s still a great time to be a landlord in Scotland
Housing to 2040 – what does it mean for landlords?
April 2021
Energy efficiency in private rented housing – when will the changes occur?
March 2021
Landlords – eight common mistakes to avoid in 2021
Landlords – four ways to improve your property this spring
February 2021
Landlords – why good broadband can help make your home more valuable
January 2021
Covid update – Scotland goes into a full lockdown, what do you need to know?
November 2020
Update – rents in West Lothian have increased above the rate of inflation since 2010
Covid-19 FAQs for landlords – what can and can’t you currently do?
Landlords – here are some top tips to reduce rent arrears
October 2020
The latest Covid-19 restrictions in Scotland and what they mean for landlords
September 2020
How to be a good landlord in 2020
News roundup – landlords call for direct government help plus short-term let regulation
August 2020
Revealed – what is the current Covid-19 advice for landlords in Scotland?
July 2020
How can landlords make a rented property feel like a home?
A potential saving for landlords? Scottish government announces cut to LBTT
June 2020
Landlord news update - Bill proposing cap on rent rises is abandoned
Landlords – dealing with tenants during the lockdown
May 2020
News roundup – Scotland home to UK’s highest yields and BTR growth north of the border
Preparing your rental property for a viewing – the top tips
April 2020
Buy-to-let mortgage holidays – what do landlords need to know?
March 2020
Landlords – here’s how to create the perfect rental property for tenants
Three ways to improve your rental property
January 2020
Deposit research and huge landlord fine highlight importance of compliance
How to renovate a rental property on a budget
December 2019
Property price update – why West Lothian is the perfect location for landlords
Landlords – here’s why you should have faith in the Scottish market
November 2019
Boost for landlords as tenant sentiment remains high
The heating conundrum – can you box off your thermostat?
October 2019
Rental trends – what are tenants looking for in a property?
How to be a responsible landlord
August 2019
Where are Scotland’s overseas investors from?
Tenancy deposit protection – how can landlords remain compliant?
HMRC clampdown on underpaid tax – what do landlords need to know?
June 2019
What do renters want from their property? Top 10 features revealed
What do landlords need to do before tenants move in?
May 2019
Landlord insurance and home insurance - what are the key differences?
The Latest on the property market and Brexit
A guide to getting a mortgage with bad credit
March 2019
How to keep condensation to a minimum in your rental properties
February 2019
Why Scotland remains an ideal buy-to-let hotspot for investors
January 2019
Plans to raise rate of additional dwelling tax – what does this mean for landlords?
Tenant immigration checks – could they be introduced in Scotland?
December 2018
2019 – what do landlords need to look out for?
Landlords - is your letting agency part of the Register of Letting Agents?
November 2018
Strong yields and growing property prices boost Scotland’s landlords
Buy-to-let mortgages – what do landlords need to know?
How to make your rental property suitable for families
October 2018
Why landlords need to work with a compliant letting agent
Scottish landlords and tenants show poor awareness of key deposit rules
September 2018
Why you need to pay attention to inventories
First-time landlord? Here’s what you need to know
August 2018
Why it’s important to respond quickly to repairs requests
Why is tenant referencing so important?
July 2018
Landlords - how can you boost the security of your rental properties?
Post navigation How to attract long-term tenants to your rental property
What do landlords need to do to be successful in 2018?
Post navigation New rules for Scottish letting agents: what do landlords need to know?
Post navigation What turns tenants off when viewing a rental property?
Here is why effective marketing is vital when letting your home
Post navigation Dates for a landlords diary in 2018
Post navigation Landlords: here is some reasons why tenants do not get their deposits back
The rise of lifetime renting – why is this good news for landlords?
June 2018
The importance of good transport links to tenants
View older stories >