Total Returns to Residential Rental Housings

Abstract

Residential rental housing is a popular choice for investment portfolios. We analyze the total rental housing returns covers nine regions in England with a total of 265,052 observations spanning from 2014 to 2021. Our findings indicate that the annualized capital gains and net income yields both contribute to the overall returns of residential rental housing in England, averaging around 2.2% and 3.0%, respectively and contains geographical dispersion at regional level. We observed that the average housing cost reduces gross income yields by approximately 38.8%. London exhibits the lowest investment performance among all regions, within which higher-priced housing tends to yield higher capital gains but lower net income yields.

Keywords: Rental housing, Total Rate of Returns, Capital Gain, Net Income Yield

JEL Classification: G11, G12, N20, R30