The 2% rule is a guideline sometimes mentioned in property investment discussions. It suggests that a rental property should generate monthly rent equal to 2% of its purchase price. For example, a £100,000 property would ideally rent for £2,000 per month.
In the UK, this rule is rarely achievable due to lower rental yields and different market conditions. Investors here typically assess properties based on gross or net yield percentages instead. They also consider mortgage costs, tax treatment, maintenance expenses and local rental demand.
While simple rules can provide a rough starting point, investment decisions should be based on realistic local figures and lender criteria. Careful financial planning is essential when entering the buy-to-let market.
Your home may be repossessed if you do not keep up repayments on your mortgage.