Comparing

Rental yield and capital growth:
weigh the objectives separately.

These are two different jobs for the same money, and the balance between them depends on the purchase price, rental income and uncertain future market conditions. Deciding which one your purchase is for is the single most useful thing you can do before you shortlist anything.

An aerial view of the River Thames and St Paul’s Cathedral at dusk
The Thames and St Paul’s Cathedral at dusk, London. Photo: Jaanus Jagomägi, Unsplash (Unsplash License).

Short answer

Rental yield and capital growth are two different jobs for the same money. Yield is income as a percentage of cost and can be estimated from day one; growth is a change in value, unknowable in advance and realised only when you sell.

A decision that improves one usually weakens the other, so decide which one your purchase is for before you shortlist.

Two jobs

What each one
actually is.

Both are legitimate objectives. Neither is more sophisticated than the other. What causes trouble is holding both at once without noticing that a decision improving one usually weakens the other.

Objective one

Rental yield

What it is
The income the property produces, as a percentage of what it cost.
What it pays for
Ongoing obligations: a mortgage, service charge, management, and income you can draw while you hold it.
How you know
Estimable from day one. Today’s rent and running costs can be measured; future rent, costs and voids are assumptions you put in a calculator, not facts.
What it costs you
The highest yields are usually attached to the properties fewest buyers compete for. There is normally a reason a price is low relative to its rent.
Objective two

Capital growth

What it is
Change in the value of the asset itself. It becomes a realised gain only when you sell; refinancing lets you borrow against it, but that is debt, not a realised gain.
What it pays for
Nothing, until then. It builds a number on paper rather than cash in an account.
How you know
You do not. It is unknowable in advance, which is why no honest page will quote you a figure for it.
What it costs you
Usually income. The locations buyers compete hardest for tend to be priced accordingly, and a higher price on the same rent is a lower yield.
Why they pull apart

This part is arithmetic,
not a market view.

You do not have to believe anything about London to accept the next point. It follows from the definition of a yield.

Gross yield  =  annual rent  ÷  price

Rent is the numerator, price the denominator. So any reason a property costs more without renting for proportionately more is, by definition, a lower yield. Two buyers can look at the identical flat and see different yields purely because they are dividing by different prices.

Your purchase price is fixed; your rental yield can changeLater changes in value do not change your rent. Yield on purchase cost can change as rent, costs and void periods change; yield on current value uses a different denominator.
A high headline yield is a question, not a findingThe right response is to ask why the price is low relative to the rent. Sometimes the answer is fine. Sometimes it is a short lease, a service charge, a building issue, or thin resale demand.
Net is the only yield worth comparingGross yield ignores service charge, ground rent, management, insurance, maintenance and empty periods. Two properties with the same gross yield can differ substantially once those are subtracted.
Neither number includes tax, currency or the cost of sellingYour own tax position, the exchange rate on the way in and out, and the cost and time of a future sale sit outside both figures and can outweigh the difference between them. If you live in Türkiye, see our guide to rental income tax and NRLS.
Deciding

Four questions that settle it
faster than any comparison.

You do not need a view on the market to answer these. You need a view on your own plan, which is the part only you have.

Does this money need to produce income while you hold it?If the property has to service a mortgage or contribute to living costs, income is not a preference; it is a constraint. Growth cannot pay a monthly bill.
How long is the money committed for?Selling is slow and costly. Growth needs a horizon long enough to absorb both, and a horizon you might cut short is an argument for income.
What happens if you are wrong?If a lower income than expected would be uncomfortable, size the purchase for the pessimistic case rather than the plausible one.
Is there a use behind the purchase?A home for a studying child or an occasional base is a third objective, and it changes what a good answer looks like on both of the other two.
Put your own numbers in

Last reviewed on 14 October 2026 against GOV.UK and HMRC guidance. General information, not advice on your own position.

Rental yield calculator → What a purchase really costs → Stamp duty calculator → Ten questions before you reserve → Compare two or three → Capital gains tax, explained →
Why there is no growth calculator here

We will not build the tool
you might expect on this page.

There is a yield calculator on this site because yield can be computed from numbers you already have. There is deliberately no capital growth calculator, because one would require a forecast, and a forecast dressed up as a calculator is the most persuasive way to mislead someone.

Any tool that asks you to pick a growth rate and then projects a value has not told you anything you did not put in. The output looks like analysis and is your own assumption, compounded.

If you want a view on how a specific building might behave over a specific horizon, that is a conversation with reasoning you can interrogate, not a number generated by a form.

Book a consultation

Tell us what the money
has to do.

Once the objective is clear the shortlist gets much shorter, and the trade-offs stop being surprises.

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