Buy-to-Let Rental Yields Europe 2026

Highest gross yields: Warsaw 6.5-8.0%; Bucharest 6.0-7.5%; Budapest 5.5-7.0%; Manchester/Liverpool (UK) 5.5-7.5%; Porto (Portugal) 5.0-6.5%. Lowest gross yields: Paris 2.8-3.5%; Amsterdam 3.0-4.0%; Berlin 3.2-4.0%; Milan 3.5-4.5%. Eastern European cities offer significantly higher gross yields but carry currency risk (PLN, HUF, RON), thinner liquidity, and higher operational friction. UK regional cities (Manchester, Liverpool, Leeds) offer the best risk-adjusted yields in Western Europe.

Amsterdam's buy-to-let market has been deliberately made unattractive for small investors through multiple simultaneous policy changes. The Dutch Box 3 wealth tax charges a hypothetical 6.04% return on investment property — taxed at 36% = 2.18%/year in tax regardless of actual income. On a €400,000 property earning 3.5% gross (€14,000 rent): Box 3 tax approximately €8,720; management 10% (€1,400); maintenance €2,000; net income approximately €1,880 = 0.47% net yield. Additionally: investors pay 10.4% transfer tax; opkoopbescherming zones prevent BTL conversion of lower-priced homes; WWS rent regulation caps rents in the 'middle market'. Amsterdam BTL is functionally uneconomic for individual investors in 2025. Most Dutch residential investors have shifted to commercial property or left the market.

Best BTL tax environments: Germany for capital gains (zero CGT after 10-year hold on residential property — the best CGT treatment in Western Europe); Portugal NHR/IFICI regime (legacy NHR holders pay 0% on foreign income for 10 years; Portuguese BTL income at 28% flat); Italy cedolare secca (21% flat tax on rental income for libre contracts; 10% for concordato — simpler than progressive scales); Ireland (structured losses can be carried forward; rental deductions improving). Worst: Netherlands (Box 3 wealth tax); France (IFI wealth tax above €1.3m net property; PVI capital gains complex). Always consult a local tax specialist — BTL taxation across EU jurisdictions is complex and legislation changes frequently.

To estimate net yield from gross yield, typical annual deductions: letting/management agent fees 8-12% of annual rent (if using agent); maintenance and repairs 1-2% of property value per year; landlord insurance 0.1-0.3% of property value; void periods 2-8% of annual rent (depending on market and tenant quality); service charges/ground rent (if leasehold — UK/Ireland); annual property tax (IMU Italy; LPT Ireland; IBI Spain; Grundsteuer Germany; OZB Netherlands — typically 0.03-1% of value). Net yield is typically 60-75% of gross yield for a well-managed property. Example: 5.5% gross → approximately 3.3-4.1% net before income tax. Income tax on net rental profit then applies at local rates.

Section 24 (Clause 24 of the Finance Act 2015, fully implemented 2020) restricts mortgage interest relief for UK residential BTL landlords: interest is no longer deductible as an expense but is instead a 20% tax credit. For higher/additional rate taxpayers (40-45%), this increased the effective tax on leveraged BTL significantly. Example: property earning £12,000 annual rent with £8,000 mortgage interest: previously taxable profit = £4,000. Post-Section 24: taxable income = £12,000 (full rent); tax at 40% = £4,800; Section 24 credit 20% × £8,000 = £1,600; net tax = £3,200. Versus previously: £4,000 × 40% = £1,600 tax. The higher tax has prompted many leveraged higher-rate landlords to sell (contributing to rental supply reduction). However, unleveraged landlords (cash buyers) are unaffected by Section 24. UK regional BTL at 5.5-7.5% gross yield remains commercially viable for cash buyers or those using limited companies (which are NOT subject to Section 24 restrictions — mortgage interest is still a deductible expense in a limited company structure).