Rental Yield Calculator

Gross vs net rental yield

Rental yield appears on property listings as a single percentage, but it is really two numbers. Gross rental yield = annual rent / property value. Net rental yield = (annual rent − operating costs) / property value. A 200,000 property renting for 12,000 a year has a 6% gross yield; after 3,000 in operating costs, the net yield is 4.5%. That 1.5-point gap is what separates the headline figure from what the property actually earns. This calculator produces both.

What net yield deducts

Operating costs commonly subtracted from gross rent to reach a net figure:

Management or letting fees: often 10-12% of rent for full management, or 6-8% for tenant-find only, where an agent is used.

Maintenance and repairs: a commonly cited allowance is 1-2% of property value a year, with older properties at the higher end. Some investors instead express this as a percentage of rent; the two bases are not interchangeable, so a net yield reflects whichever one was applied.

Insurance: buildings cover plus landlord cover, often a few hundred a year.

Void periods: allowing for empty periods between tenancies is common, often around 5-10% of rent a year depending on demand.

Compliance and safety checks: periodic certificates and inspections carry a recurring cost that varies by country.

Service or estate charges: where a property carries communal or ground charges, these can add several hundred to a few thousand a year.

Not part of net yield: mortgage interest (it affects cash flow, not the yield on the asset), large capital items such as a new roof or kitchen (they affect returns but are not ongoing operating costs), and the owner's own time if self-managing.

Typical yields by property type

Yields vary widely by location and property type; the ranges below are broad orientation rather than benchmarks, and they differ by country and over time.

Prime metropolitan apartments: often 2.5-4% gross. High values pull yields down, and buyers usually rely on capital growth.

Outer-metro and suburban homes: often 3.5-5% gross.

Regional cities and professional lets: often 5-7% gross.

Student housing: often 6-8% gross, with more operational complexity.

Shared or multi-tenant housing (multiple occupancy): often 8-12% gross, but with substantially higher management overhead, turnover, and compliance; net yields commonly land around 5-8% once those are accounted for.

Yields far outside the local norm tend to warrant scrutiny: unusually high yields often signal location, condition, or demand risk, while unusually low yields in a cash-flow market can indicate overpayment.

What yield misses: capital growth

Yield measures income only. Total property return = yield + capital growth. A 5% yield property with 5% annual capital growth produces a 10% total return; an 8% yield property with 1% growth produces 9%. The lower-yield property often wins on total return in growth areas, and the higher-yield property wins in flatter markets. This is why some low-yield locations stay expensive despite unattractive headline yields: buyers price in expected capital growth.

How leverage changes the picture

A mortgage changes the return on the cash actually invested. Take a 200,000 property let for 12,000 a year (a 6% gross yield) with 3,000 of operating costs. Bought for cash, the net income is about 9,000 on 200,000 invested. Bought with a 25% deposit (50,000) and a 150,000 mortgage at 5% interest (7,500 a year), the picture is 12,000 rent − 3,000 costs − 7,500 interest = 1,500 cash flow after interest, or 1,500 / 50,000 = 3% cash-on-cash. Leverage only lifts the return when the net yield comfortably exceeds the borrowing rate; when mortgage rates sit close to or above the yield, a positive-yield property can still produce negative cash flow, and the owner is relying on capital growth to compensate.

Tax treatment varies by country

How rental income and mortgage interest are taxed differs widely. In some countries individual landlords can fully deduct mortgage interest before tax; in others the deduction is capped or replaced by a limited credit, which raises the effective tax for higher earners. Holding property through a company can change the treatment but adds administrative cost. Because the rules and thresholds vary by country and change over time, this calculator does not model tax; the yield it shows is pre-tax and pre-financing.

Shared and multi-occupancy housing

Renting a property by the room (multiple occupancy) can raise the gross yield into the 8-12% range, but the overhead is proportionally higher: shorter tenancies and more frequent re-letting, stricter room-by-room fire and safety requirements, licensing or registration in many jurisdictions, and more intensive management across several tenancies. After those costs, net yields commonly land around 5-8%. It is closer to running a small business than to passive income.

The property yield curve

Much like bonds, property spans a curve from lower-risk, lower-yield to higher-risk, higher-yield. Prime residential is roughly 2.5-4% gross, with the lowest yields and often the strongest capital-growth history. Regional professional rentals are roughly 5-7% gross, moderate on both. Student housing is roughly 6-8% gross, higher-yielding with operational complexity. Multiple-occupancy housing is roughly 8-12% gross, highest-yielding and highest-overhead. Commercial property is a different profile again, with longer leases and more concentrated tenant risk. Where on this curve a property sits is partly a financial question and partly a question of how hands-on the owner wants to be: lower-yield properties tend to be more passive, higher-yield ones more management-intensive.

What this calculator shows

The tool computes gross and net rental yield from property value, annual rent, and operating costs. It does not apply regional benchmarks, leverage, tax, or capital-growth projections. The figures give a standardised basis for comparing properties; the other factors sit alongside them in a fuller analysis.