Updated
GL-R-07
Glossary · Real estate
Rental Yield
How much a property earns per year from rental as a percentage of its price. It matters when investment real estate is bought not only for status but also for income.
01 / In 30 seconds
The short answer
- What it is
- How much a property earns a year from rent, as a percentage of its price
- Where it applies
- Assessing investment property, including for residence
- How it is calculated
- Annual rent divided by the price of the property
- Gross and net
- Net — after taxes, maintenance and vacancy
- Can it be assessed
- Yes: compare properties on actual, not promised, yield
02 / In plain words
What Rental Yield means
Rental yield is an indicator of how much a property earns a year from letting, expressed as a percentage of its price. For example, a property costing €300,000 that brings in €15,000 of rent a year has a yield of 5%. It is the key metric when real estate is bought not only for status but as an investment.
There is gross yield and net yield. Gross is simply annual rent against the price. Net is more realistic: taxes, upkeep, management, insurance and vacancy (months when the property stands empty) are deducted from the rent. It is net yield that shows what you actually take home, and it is always lower than the developer’s gross figure.
In citizenship and residence programmes, yield matters doubly: approved property is often priced above market because of the “programme premium”, which lowers the yield. That is why properties are compared on the actual rather than the promised figure, bearing in mind that the property must be held for part of the period under the programme’s conditions.
A case from practice
A developer promises a 7% yield on a property for a Golden Visa. After deducting taxes, management, insurance and a couple of months of vacancy, the real net yield turns out to be about 4%. Allowing for the programme premium, the investor compares several properties on the net figure and makes an informed choice.
Where yield matters
- Investment property
- Golden Visa and CBI through real estate
- Comparing properties with each other
- Rent as a source of income
- Assessing the “programme premium”
- Planning the return on investment
03 / What it covers
What matters about yield
Calculation
- Annual rent against price
- As a percentage
- Gross and net
Net
- Less taxes
- Less upkeep
- Less vacancy
Reality
- Lower than gross
- Check against the market
- Not promises
In programmes
- Programme premium
- Lowers the yield
- Holding period
04 / How it works
How to assess yield
Collect actual rental rates
Calculate net yield
Account for taxes and vacancy
Compare properties
An informed choice
05 / Key facts
What you need to know
01
Yield is annual rent as a percentage of the price
02
Net yield is always lower than gross
03
Taxes, upkeep and vacancy are deducted from the rent
04
Developers usually quote the gross figure
05
The programme premium lowers the real yield
Common mistakes
- Looking at gross yield instead of net
- Trusting the developer’s gross figure
- Not accounting for vacancy and upkeep
- Ignoring the programme premium
- Forgetting taxes on rent
06 / Expert advice
How to prepare in advance
Properties are compared on actual rather than promised yield: actual market rental rates are collected, net yield is calculated after taxes, upkeep and vacancy, and the programme premium and mandatory holding period are taken into account. Then the property gives both status and predictable income, not just an attractive figure from a presentation.
What we do for you. We calculate the real, net yield of properties rather than taking the developer’s promises: we account for taxes, upkeep, vacancy and the programme premium. That way you compare real estate on actual income and choose a property that gives both status and money.
Igor VentsHead of real estate, Title Deed and property checks
07 / Questions
Frequently asked questions
Annual rental income is divided by the price of the property and expressed as a percentage. A property costing 300,000 with rent of 15,000 a year yields 5%.
Gross is simply rent against price. Net is after taxes, upkeep, management and vacancy. It is net yield that shows what you take home.
Usually the gross figure is quoted, with no deductions or vacancy. The real net yield is always lower, so it is calculated separately against the market.
Yes: approved property is often priced above market because of the programme premium, which lowers the yield. Properties are compared with this in mind.
Yes, without fail. The tax on rental income depends on the country and your residence and has a noticeable effect on net yield.
Compare several properties on actual net yield, allowing for vacancy, taxes and the programme premium, rather than on the promised figure.
INITIAL ASSESSMENT
Tell us what outcome your family needs
We will design a solution for your case, choose the country and the right status, and take the whole process through to the result.
