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Glossary

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Mean

Mean is the most common way to calculate an average rent, by adding all the values together and dividing by the number of values used.

Median

The median calculates an average by arranging the values in order of magnitude and finding the middle value. If there is an even number of values the median is the mean of the two values, closest to value in the middle.

Mix adjustment

Mix adjustment is the division of different cells with similar characteristics, such as location and number of bedrooms. Rental price data can then be allocated to the different cells in order to assess the average price of each cell, i.e. of properties with different characteristics. After the mean values have been weighted, the average cell price is the mix-adjusted price. Findaproperty.com’s Rental Index uses 136 different cells. Mix-adjustment is not widely used in calculating rental price indices and is mainly used in house price indices.

Yield

Yield is the return on investment for landlords taking into account rent charged and the price paid for the property. Gross yield does not take into account operating costs of managing a property such as insurance and letting agents’ fees and is calculated by dividing the property’s annual rent by the value and expressed as a percentage. Net yield carries more credibility among landlords as it takes into account operating costs. This is calculated by subtracting the operating costs from the rent charged then dividing by the price paid for the property.

Void period

This is the length of time a property is left vacant either straight after purchasing the property to rent or when a tenant leaves and a replacement tenant is found. When demand for rental property is high the length of the void period reduces. LSL Buy to Let Index takes into account the void period when calculating the yield. This process is sometimes referred to as void-adjustment.

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