5 Proven Ways to Boost Your Rental Yield in 2025

Achieving an optimal rental yield remains the holy grail for property investors navigating the competitive real estate landscape in 2025. While a healthy rental yield typically ranges between 3% and 5%, depending on location and property condition, savvy investors can significantly boost these returns with the right strategies.

Understanding what constitutes a good rental yield is essential for investment success. In capital cities, properties generally trend between 3-5% rental yield, whereas regional areas often deliver higher returns exceeding 5%. However, these figures are merely starting points. Small-scale property upgrades can boost rental returns by 10–15%, while larger renovations may justify even higher rents.

Effectively calculating and maximising rental yield requires more than basic mathematics. Investors looking to optimise returns should focus particularly on net rental yield, as it reflects a property’s true earning potential. Additionally, regions with new infrastructure projects or growing job markets, such as Western Sydney and regional centres, are expected to perform exceptionally well in 2025.

For property owners who want to improve the performance of their investments, putting the right strategies into practice can make all the difference. A higher rental yield indicates better cash flow, which is crucial for sustaining your investment and achieving financial growth. The following proven methods offer practical approaches to boost rental returns and secure the longevity of your property investment.

Understand and Calculate Rental Yield

For property investors, rental yield serves as a fundamental metric to evaluate investment performance. This financial indicator measures the return generated by a rental property relative to its value, providing essential insights into its profitability. Mastering the basics of rental yield calculation creates a solid foundation for informed decision-making before diving into complex investment strategies.

What is Rental Yield?

A property’s rental yield is the amount of money it makes each year as a percentage of its entire cost or current market value. This metric enables investors to evaluate the potential for a property to generate income compared to other investment options. In essence, rental yield quantifies how efficiently your property puts money in your pocket.

Two distinct types of rental yield exist, each serving different analytical purposes:

Gross rental yield: This shows the property’s yearly rental income as a proportion of its entire cost or current market value, before any costs are deducted. It provides a quick initial assessment of a property’s potential.

Net rental yield: This more comprehensive metric factors in expenses related to property ownership, giving investors a clearer picture of the property’s actual profitability. It represents the income you receive after costs have been deducted.

How to Calculate Rental Yield Accurately?

Calculating rental yield requires different approaches depending on whether you’re determining gross or net yield.

Calculating Gross Rental Yield:

The formula for gross rental yield is straightforward:

Gross Rental Yield = (Annual Rental Income ÷ Property Value) × 100

To calculate gross rental yield, follow these steps:

1. Calculate your annual rental income (weekly rent × 52)
2. Divide this figure by the property’s value
3. Multiply by 100

For example, consider a property valued at £600,000 with a weekly rent of £450:

• Annual rental income: £450 × 52 = £23,400
• Gross rental yield: (£23,400 ÷ £600,000) × 100 = 3.9%

This calculation provides a proper initial assessment but doesn’t account for ongoing expenses associated with property ownership.

Calculating Net Rental Yield:

For a more accurate picture of your property’s performance, calculating net rental yield is essential:

Net Rental Yield = [(Annual Rental Income – Annual Expenses) ÷ Property Value] × 100

To calculate net rental yield:

1. Determine your annual rental income
2. Subtract all annual property expenses
3. Divide this figure by the property’s value
4. Multiply by 100

Using our previous example, if the property incurs £5,000 in annual expenses:

• Net income: £23,400 – £5,000 = £18,400
• Net rental yield: (£18,400 ÷ £600,000) × 100 = 3.1%

Expenses to include when calculating net rental yield:

• Insurance
• Strata/body corporate fees
• Council rates
• Property management fees
• Maintenance costs
• Legal fees
• Building inspection fees
• Vacancy costs

Notably, mortgage interest payments aren’t typically included in standard net yield calculations, as they relate to your personal financial situation rather than direct property costs.

Related Article: Mortgage Calculator UK: Estimate Your Monthly Payments with Ease

What is a Good Rental Yield in 2025?

A “good” rental yield is determined by a number of criteria, such as location, property type, and personal investing objectives.

In metropolitan areas, especially capital cities, gross rental yields typically range from 2.5% to 4%. Properties yielding below 2.5% often represent high-end, luxury properties. In contrast, regional areas frequently deliver higher returns, with gross rental yields typically between 3.5% and 4.5%.

According to current data, the national rental yield hit 3.74% in March 2025, the highest since 2019, as rents are growing faster than property prices. This trend indicates a strengthening rental market nationwide.

In Sydney, properties with gross rental yields over 3.5% for houses and 5.0% for units are considered excellent. Meanwhile, Melbourne investors typically target 3.8%+ net rental yield for houses and 5.0%+ for units to achieve strong returns.

Brisbane currently offers an appealing balance between yield and growth potential, with strong returns considered to be 4.0%+ for houses and 5.0%+ for units.

From an evaluation standpoint, different yield ranges suggest different investment characteristics:

• Low yield (2-4%): May indicate the property is overvalued
• Moderate yield (4-6%): Generally considered a good balance between income and growth potential
• High yield (8-10%): Could suggest the property is undervalued or below market value

When assessing rental yield potential as a deciding factor for purchase, aiming for 5.5% or higher is advisable due to the stability offered by substantial rental income. Nevertheless, it’s essential to recognise that lower-yielding properties in blue-chip areas may offer better capital growth prospects despite generating less immediate cash flow.

For 2025 specifically, three-bedroom duplexes are recording the strongest yields at 4.8%, followed by three-bedroom houses at 4.7%. This data provides valuable insights for investors considering specific property types.

Ultimately, the ideal rental yield aligns with your investment strategy. If you prioritise steady cash flow, higher-yielding properties in regional areas might be more suitable. Conversely, if capital growth is your primary goal, accepting lower yields in metropolitan areas could be a strategic choice.

Find and Retain Quality Tenants

Securing quality tenants represents one of the most significant factors in maximising rental yield. The relationship between tenant quality and investment performance extends beyond simply filling vacancies—it directly impacts property value, maintenance costs, and overall returns. Finding and keeping excellent tenants requires strategic planning and consistent relationship management.

Why Good Tenants Matter?

Quality tenants contribute significantly to rental yield by providing reliable income and reducing costs associated with property management. First and foremost, good tenants treat your property with respect, maintaining its condition as though it were their own home. This approach minimises wear and tear over time, preserving the property’s value.

Beyond property preservation, reliable tenants ensure consistent rental income through timely payments. This financial stability allows investors to effectively plan their finances, cover mortgage payments, and fund necessary property improvements without disruption.

Additionally, even in tight rental markets with vacancy rates below 1%, finding suitable replacement tenants isn’t instantaneous. Consequently, properties frequently sit vacant for periods, directly impacting annual rental yield calculations.

Good tenants also contribute positively to community relationships, fostering positive interactions with neighbours and reducing the likelihood of complaints. This goodwill creates a supportive environment around your investment property, enhancing its appeal for future tenants.

Tenant Screening Best Practices

Thorough tenant screening forms the foundation of successful property investment. Effective screening begins even before formal applications, with initial conversations that help identify potential concerns. During these preliminary discussions, asking straightforward questions about pets or mentioning background checks can provide valuable insights into applicant suitability.

When evaluating applications, prioritise these key areas:

1. Identity verification: 100 points of ID are required to confirm the applicant’s identity.
2. Income verification: Request three recent pay slips and/or bank statements highlighting income to ensure financial capability.
3. Rental history: Contact previous landlords to verify payment reliability, property maintenance, and any potential disputes.
4. Employment stability: Confirm current employment and assess work history consistency.
5. References: To create a thorough application profile, consult with both personal and professional references.

Incentives to Retain Long-Term Tenants

Once you’ve secured quality tenants, implementing strategies to encourage lease renewals becomes essential for maintaining strong rental yields. Tenant retention activities acknowledge that the property serves as your tenant’s home and should be treated accordingly. This recognition fosters a sense of ownership that encourages active participation in property upkeep.

Establishing clear channels for tenants to express concerns or maintenance requests demonstrates responsiveness and builds trust. Promptly addressing issues shows tenants that you value their comfort and the property’s condition.

Offering tangible incentives for lease renewals proves particularly effective:

• Monetary incentives, such as discounted rent for the renewal month
• Professional cleaning services are provided annually
• Property upgrades like new appliances or flooring
• Gift cards or small appreciation tokens

Starting renewal conversations early reduces tenant stress and provides stability. By proactively discussing lease extensions, you demonstrate interest in continuing the relationship while reducing the likelihood of tenants exploring alternative housing options. Additionally, consider offering flexible lease terms or locked-in rental rates for more extended periods to create certainty for both parties.

Property maintenance plays an important role in tenant satisfaction. Addressing repair requests promptly and conducting regular preventative maintenance shows investment in tenant comfort and property condition. As tenants increasingly expect higher standards in exchange for rising rents, maintaining your property in excellent condition becomes essential for retention.

Government incentives can also support long-term leasing arrangements. The Western Australian government has extended incentive schemes until December 2025, offering $15,289.90 for converting short-term rentals and $7,644.95 for vacant properties converted to long-term rentals (minimum 12-month lease). These programmes aim to increase rental housing availability while encouraging longer tenancies.

Allowing reasonable personalisation can significantly enhance tenant satisfaction. Rather than imposing rigid restrictions on minor décor changes, consider permitting tenants to make the space feel like home, with the condition that they restore changes upon departure. This flexibility creates a sense of ownership and belonging that encourages longer tenancies.

Maintenance and Upkeep

Proper maintenance serves as the backbone of successful property investment, directly influencing both short-term income and long-term asset appreciation. Neglected properties invariably lead to declining rental yields through increased vacancy rates, reluctant tenants, and escalating repair costs. Strategic maintenance management not only preserves property value but also creates opportunities to enhance rental returns significantly.

Preventative Maintenance Strategies

Proactive property care prevents minor issues from escalating into costly emergencies. Regular inspections form the cornerstone of effective preventative maintenance, ideally conducted at least twice yearly, focusing on structural integrity, plumbing, electrical systems, and HVAC units. These scheduled evaluations allow landlords to identify potential problems before they develop into major expenses.

Creating a maintenance schedule helps systematise upkeep activities throughout the year. This approach ensures all critical systems receive appropriate attention and helps property owners plan for seasonal maintenance needs. A well-structured maintenance plan might include:

• Monthly checks of smoke alarms and safety equipment
• Quarterly pest control and gutter cleaning
• Biannual HVAC servicing before the summer and winter seasons
• Annual roof inspections and exterior painting assessment

How Maintenance Affects Rental Yield

Property maintenance directly impacts rental yield through multiple channels. First and foremost, well-maintained properties command higher rents, as tenants willingly pay premium prices for homes in excellent condition. As property condition improves through ongoing maintenance, landlords can implement gradual rent increases, thereby boosting overall rental yield without significant tenant pushback.

Tenant retention represents another crucial factor in maximising rental returns. Properties with consistent maintenance experience substantially lower vacancy periods as prospective tenants are naturally drawn to properties showing clear signs of care and attention. Furthermore, existing tenants are more likely to renew leases when they experience prompt attention to maintenance requests, reducing costly turnover periods.

In terms of financial impact, addressing maintenance proactively creates more predictable expenses compared to reactive approaches. Regular, planned maintenance typically costs less than emergency repairs, which often involve premium pricing for urgent service and more extensive damage correction.

Long-term asset value preservation represents perhaps the most significant benefit of regular maintenance. A well-maintained property appreciates more reliably, even in fluctuating market conditions, making it a more valuable asset for future sale or refinancing. In contrast, neglected properties typically decline in value, often necessitating major renovations before commanding market-appropriate prices.

Related Article: The Ultimate Guide to Home Renovation for Property Investors

Creating a Maintenance Fund

Establishing a dedicated maintenance fund ensures property owners can address issues promptly without financial strain. This preparation proves particularly important for unexpected repairs like leaky roofs or appliance failures that require immediate attention. Without adequate reserves, landlords might defer essential maintenance, potentially leading to more significant problems and tenant dissatisfaction.

Importantly, maintenance funds should be kept separate from other accounts to ensure availability when needed. Setting up automatic transfers of a percentage of monthly rental income to this dedicated account helps maintain consistent contributions without requiring additional thought or effort. Financial advisors typically recommend allocating 5-10% of annual rental income to maintenance reserves, though this percentage may increase for older properties.

Beyond emergency repairs, maintenance funds should also cover planned upgrades and regulatory compliance requirements. For instance, landlords in Australia needed to budget for smoke alarm upgrades to meet 2022 compliance standards, representing a significant but necessary expense. Having established reserves ensures these predictable but substantial costs don’t disrupt cash flow or reduce overall rental yield.

Allow Pets and Adjust Rent Seasonally

Pet-friendly policies and seasonal pricing strategies represent significant opportunities for landlords seeking to maximise rental returns in 2025. These approaches respond directly to market demands and can significantly impact rental yield calculations when implemented strategically.

Why Pet-Friendly Rentals Are In Demand?

The statistics paint a clear picture: pet ownership in Australia has reached unprecedented levels, with 69% of households now including at least one pet. From 2019 to 2021 alone, pet ownership rates jumped from 61% to 69%, primarily driven by a surge in dog ownership during the pandemic. In fact, a 2022 survey revealed that 6.9 million Australian households own a pet, and among those that don’t, over half would like to.

Yet despite this widespread pet ownership, finding suitable rental accommodation remains challenging for pet owners. Pet-friendly rental properties continue to be in short supply, creating a significant gap between supply and demand. Many tenants report having to relinquish their pets to secure housing, with 52% of those who have given up pets being tenants compared to 40% being homeowners.

With this in mind, landlords who adopt pet-friendly policies immediately gain access to a substantially larger pool of potential tenants.

How to Price Pet-Friendly Properties?

The financial benefits of pet-friendly policies extend beyond simply reducing vacancies. In view of the limited supply of pet-accommodating rentals, tenants with pets often demonstrate willingness to pay premium prices:

• Tenants with pets are prepared to pay between 7% and 14% more rent than tenants without pets
• Nearly one-third (31%) of pet owners would be willing to pay additional rent or fees to secure a pet-friendly property
• Properties with pet-friendly features like fenced yards and durable flooring can command even higher premiums

Although in most states, pet-friendly properties cannot be explicitly advertised at higher rates than comparable non-pet properties, tenants frequently negotiate to pay more if they can bring their pets. This willingness to pay premium rates directly enhances rental yield calculations.

Beyond immediate financial gains, pet-friendly properties typically benefit from enhanced tenant loyalty. Pet owners, keenly aware of the challenges in finding suitable accommodation, generally stay longer in properties that welcome their animals. This extended tenancy reduces turnover costs and stabilises rental income—critical factors in maintaining consistent rental yield over time.

Adjusting Rent For Seasonal Demand

Alongside pet-friendly policies, strategic seasonal pricing represents another approach to optimising rental yield. While traditional annual leases typically maintain fixed rates throughout the year, property investors can benefit from understanding and responding to seasonal demand fluctuations.

The principle behind seasonal adjustments is straightforward: aligning rental rates with periods of peak demand. Throughout the year, rental markets experience natural ebbs and flows influenced by factors such as:

• University semesters and school terms
• Tourist seasons in holiday destinations
• Weather patterns affecting the desirability of specific locations
• Business relocation periods

By identifying these patterns within specific markets, landlords can implement pricing strategies that capitalise on periods of heightened demand while offering competitive rates during slower seasons. This approach not only maximises income during peak periods but also reduces vacancy risks during off-peak times.

Review and Optimise Rental Pricing Regularly

Regular review of rental pricing will form the cornerstone of a sustainable investment strategy in 2025. Effective pricing optimisation relies on market awareness, strategic timing, and legal compliance to maximise returns without compromising tenant relationships.

Calculating Rental Yield from Market Data

Contemporary investors utilise data-driven approaches to determine optimal rental prices. Tools like RentCast provide real-time rental property data, offering accurate rent estimates for any property type whilst displaying nearby rental comps. These platforms allow investors to pull detailed market statistics, averages, and historical rent trends for specific locations.

Conducting a rental comparative market analysis (CMA) helps establish accurate pricing by comparing similar properties recently leased. Properties included should have been rented within the past three to six months to reflect current market conditions. Beyond setting prices, a well-structured CMA calculates yield by comparing rental income to sale price, enabling investors to determine if a property adequately covers costs like maintenance and finance.

When and How To Increase Rent?

Setting optimal rent requires monitoring local market trends. Initially, perform a gross yield calculation comparing your property to suburb averages. Simply multiply the average rental yield of comparable properties by your property’s estimated value to determine approximate annual rent expectations.

Timing remains crucial for rent adjustments. Summer and early autumn typically represent peak rental demand periods, potentially commanding up to 41% higher rates than winter months. Simultaneously, understanding the price-value relationship ensures rates align with property quality—prospective tenants can readily identify whether a rental warrants its listed price.

Henceforth, regular market monitoring helps identify opportunities to increase rents without risking tenant turnover. For properties anticipating future market improvements, consider including additional clauses in leasing contracts allowing for subsequent rent reviews.

Staying Compliant With Rental Laws

Rental increase regulations vary significantly between states. Following recent legislative changes across Australia, landlords must adhere to stricter limitations:

Conclusion – Rental Yield

Maximising rental yield requires a comprehensive approach that addresses multiple aspects of property investment. Property owners who understand how to calculate both gross and net rental yields gain a significant advantage when evaluating potential investments. This foundation, coupled with strategic tenant selection, creates stable income streams while minimising costly turnover periods. Thorough screening processes and thoughtful retention incentives certainly pay dividends through extended tenancies and reduced vacancy rates.

Preventive maintenance similarly plays a crucial role in preserving both property value and tenant satisfaction. Regular inspections, prompt repairs, and dedicated maintenance funds protect investments from deterioration while justifying premium rental rates.

Pet-friendly policies represent another powerful yield-boosting strategy, especially as pet ownership continues to rise across Australia. Landlords who tap into this market can expect faster leasing times and tenants willing to pay 7-14% higher rents.

Regular market analysis rounds out these strategies by ensuring rental prices remain competitive yet profitable. Landlords must balance yield optimisation against regulatory compliance, particularly as rental laws evolve across different states.

Successful property investors rarely implement these strategies in isolation. They combine these approaches, adapting them to specific market conditions and property characteristics. Property owners who consistently apply these proven methods will undoubtedly position themselves for strong rental yields throughout 2025 and beyond.