We have some exciting news to share! The Motley Fool UK has now become The Twelfth Magpie -- an independent, UK-owned company, led by our long-serving UK management team — Mark Rogers, Chris Nials and Heather Adlington. In practical terms, it’s the same team you know, now fully focused on serving our UK readers and members.

Just as importantly, our approach remains unchanged: long-term, jargon-free, and on your side. This site is our new home, and there will be extra tweaks made across the coming few days as we settle in. So if anything looks a little off, please bear with us!

How much passive income could be generated from £274k in an ISA?

The average house price in the UK is now £274k. What kind of passive income might that same amount bring in a Stocks and Shares ISA?

| More on:
Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Twelfth Magpie’s Premium Investing Services. Become a member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more, and get a free 'Best Buy Now' stock!.

It seems that more and more people are waking up to the idea of using a Stocks and Shares ISA as the main place to invest and aim for passive income. And in many cases, this will be instead of buying property. Some might be opting against a buy-to-let because of the new rules for landlords that are being brought in. Some might simply prefer renting and want a more mobile place to park some cash.

The average house price in 2026 has grown to £274,000. What would that kind of sum look like in a Stocks and Shares ISA? And how much passive income might it return? Let’s answer those questions.

Should you buy Taylor Wimpey Plc shares today?

Before you decide, please take a moment to review this report first. Despite ongoing uncertainties from US tariffs to global conflicts, Mark Rogers and his team believe many UK shares still trade at substantial discounts, offering savvy investors plenty of potential opportunities to learn about.

That’s why this could be an ideal time to secure this valuable research – Mark’s analysts have scoured the markets to reveal 5 of his favourite long-term ‘Buys’. Please, don’t make any big decisions before seeing them.

How much?

In simple terms, an investor might aim for a 5% dividend yield in the ISA, which would return £13,700 yearly from the £274k. This compares favourably to the current yields from housing, which hovers around 3%-7%. That figure does vary massively depending on location, house type, and other factors.

The long-term average, including share price appreciation, is closer to 10%. This would return an average of £27k a year. However, this would not be at all consistent with many down as well as up years along the way. Given the often volatile nature of the stock markets, it’s considered a bad idea to try to rely on such a high figure as passive income.

One side of the coin? Historical performance suggests stocks win handsomely in purely financial matters over long periods. The other side? There are no guarantees the future will be the same. A stuttering economy, a potential AI bubble popping, or a multi-decade stagnation like that Japan experienced are all risks investors should be aware of.

One option

Another advantage to the Stocks and Shares ISA is the flexibility of the type of investments within it. Let’s say you were bullish on the housing market in general. Then you might wish to consider a stock in a company like Taylor Wimpey (LSE: TW.) that builds houses up and down the country.

This does require doing the research of course. The housing sector is being rocked at the moment by inflation. The rising cost of materials and wages has led to a rough few years for such stocks. Taylor Wimpey shares have dropped 55% down to 79p. Someone who is not willing to take the rough with the smooth may think a house is a safer place to invest in.

Amid the turmoil, there may be a bargain hiding in plain sight too. Taylor Wimpey pays a huge dividend of 9.57% which looks stable for the short term. The possibility of falling interest rates could be a boon for the stock too. If general conditions improve, then this could be one of those stocks that perform above average and deliver passive income for years to come.

John Fieldsend has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young black female footballer training on stadium pitch
Investing Articles

How has this FTSE 250 share surged ANOTHER 7% today?

Applied Nutrition shares have soared on Monday after another brilliant trading update. So what's the FTSE 250 company's secret?

Read more »

Black woman using smartphone at home, watching stock charts.
Investing Articles

The stock market game you’re actually playing (and why you might be losing)

Our writer recounts a painful experience of making a rash stock market decision based on emotions, not logic – and…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Why is EasyJet stock suddenly a takeover target for US investors?

Andrew Mackie looks at easyjet shares jumping on US takeover talk — but is this a genuine re-rating or just…

Read more »

Young Black woman looking concerned while in front of her laptop
Investing Articles

Have investors got BT shares all wrong?

BT shares spiked during the 1990s telecom boom, then struggled for two decades. Harvey Jones says it's the future that…

Read more »

BUY AND HOLD spelled in letters on top of a pile of books. Alongside is a piggy bank in glasses. Buy and hold is a popular long term stock and shares strategy.
Investing Articles

Looking for buying opportunities in June? Here’s 1 to consider from my Stocks and Shares ISA

The conflict in Iran is making one of the investments in Stephen Wright’s Stocks and Shares ISA volatile. But could…

Read more »

Row of blue European Union flags in Brussels.
Investing Articles

After crashing 13.7% today, is Wise now a stock market bargain at 805p?

Wise was one of the biggest fallers on the UK stock market today. What on earth is going on with…

Read more »

Road 2025 to 2032 new year direction concept
Investing Articles

At 8% is this eye-popping FTSE 100 dividend yield simply too good to be true?

The dividend yield is to die for, but the share price is lacking in life. Harvey Jones examines whether this…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

UK investors are piling into this legendary S&P 500 growth stock while it’s down 50%

This US growth stock fell from $240 to $80 amid AI disruption fears. And investors are now aggressively buying it…

Read more »