Rental yield is the annual rent a property earns expressed as a percentage of its value. It is the headline measure investors use to compare the income return of different properties.
Where you’ll see it
You’ll see rental yield quoted in investment analysis and listings. Gross yield is annual rent divided by price; net yield deducts costs such as service charges, management and maintenance, giving a truer picture of the return.
Why it matters
Yield helps investors compare opportunities and judge whether a property’s income justifies its price. A high gross yield can shrink once costs are deducted, so distinguishing gross from net is essential to avoid overstating the return.
What it is not
Rental yield is not capital appreciation — it measures income, not the change in the property’s value. Gross yield is also not net yield; ignoring costs overstates the actual return.
Example
An investor compares two apartments by net rental yield, deducting service charges and management costs, and chooses the one whose income return is genuinely higher after expenses.
Connected documents and parties
Rental figures, service-charge statement, cost estimates; investor, agent, owners association.
Going deeper: related reading: service charge index, which affects net yield.
Related Terms
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