Reversionary Yield
Compare initial and reversionary yields on an under-rented or over-rented asset.
Introduction
Who this is for: Investors assessing assets where passing rent differs from market rent.
Why it matters: The gap between passing rent and ERV is where value-add returns come from. Reversionary yield shows what the asset would yield once that gap closes.
Typical scenario: An office let at £45,000 when ERV is £62,000, with a review in two years.
- Assuming reversion is automatic — it requires a review, renewal or re-letting event.
- Ignoring the time value of waiting several years for reversion.
- Missing that an over-rented asset reverts downwards.
Inputs
Income
years
Analysis
Passing rent of £45,000 gives an initial yield of 6.00%. At an ERV of £62,000, the reversionary yield is 8.27% — the asset is under-rented (reversionary).
This analysis provides context, not financial advice. Consult a qualified adviser before making investment decisions.
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Sensitivity
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Live Results
Initial Yield
6.00%
Reversionary Yield
8.27%
Rental Uplift
37.78%
Additional Income
£17,000