Gross vs net rental yield: what is the difference?

Checked 20 October 2026 by Seann Siow, REN 34312. Sources are listed at the end of this page.

Short answer: Gross rental yield is a year's rent divided by the purchase price. Net rental yield takes off the yearly costs of owning the property first, so it is always lower and closer to what an owner keeps. Whenever someone quotes a yield, ask whether it is gross or net, and which costs are left out.

The two formulas

Measure	Formula	Includes	Leaves out
Gross rental yield	Annual rent ÷ purchase price × 100	Rent only	Every cost of owning and renting out
Net rental yield	(Annual rent − annual owning costs) ÷ purchase price × 100	Rent minus the costs you list	Whatever costs the person leaves off the list; often loan interest and tax

Some people divide by the price plus purchase costs (stamp duty, legal fees) instead of the price alone. That gives a lower, more realistic figure. Either way is fine, as long as it is stated.

Yearly costs to take off for a Malaysian condominium

Maintenance fee and sinking fund, charged monthly by the building's management.
Assessment tax (cukai taksiran), charged by the local council.
Quit rent (cukai tanah), the annual land tax.
Insurance for the unit and contents.
Agent or management fees for finding tenants and handling the rental.
Empty months between tenants.
Repairs and replacing furniture and appliances.

Loan interest and income tax on rent are usually left out of "net yield" and treated separately. If they are included, say so.

A worked example

Made-up figures, only to show the method. This is not a forecast for any property, and real rents and costs vary.

Item	Amount	Working
Purchase price	RM1,000,000	Example figure
Monthly rent	RM3,500	Example figure
Annual rent	RM42,000	RM3,500 × 12
Gross yield	4.2%	RM42,000 ÷ RM1,000,000 × 100
Maintenance and sinking fund	RM6,000	RM500 a month × 12 (example)
Assessment tax and quit rent	RM1,500	Example figure
Insurance	RM500	Example figure
One empty month	RM3,500	One month's rent
Repairs	RM1,000	Example figure
Total annual costs	RM12,500	Sum of the five costs
Net yield	2.95%	(RM42,000 − RM12,500) ÷ RM1,000,000 × 100

The same flat shows a 4.2% gross yield and a 2.95% net yield. That gap is why a quoted yield means little until you know which one it is.

Questions to ask when someone quotes a yield

Is that gross or net?
Which costs are taken off, and which are left out?
Is the rent an actual signed rent, or an asking rent from listings?
Does it assume the unit is let all year?
Is it divided by the price alone, or the price plus purchase costs?

Rental income is never guaranteed. Rent, occupancy and costs change, and none of the figures on this page is a promise of what any property will earn.

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Frequently asked questions

How do I calculate gross rental yield?

Divide a year's rent by the purchase price and multiply by 100. For example, RM42,000 of rent a year on a RM1,000,000 property is a 4.2% gross yield.

How do I calculate net rental yield?

Take the yearly costs of owning the property off the annual rent, then divide by the purchase price and multiply by 100. List which costs you included, because net yields are only comparable when the same costs are taken off.

Does net rental yield include loan interest?

Usually not: most people treat loan interest and income tax on rent separately from net yield. If a figure does include them, it should say so.

Why is the yield I was quoted higher than my own sum?

It is probably a gross yield, or a net yield that leaves out some costs, such as empty months or repairs. Ask which costs were taken off.

What is a good rental yield in Malaysia?

There is no single figure that suits every buyer. Compare net yields worked out the same way, on actual signed rents, for similar units in the same area.

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About the author

Seann Siow is a registered estate negotiator in Kuala Lumpur (REN 34312) with more than 10 years in property. He helps foreign buyers and relocating families buy new condominiums in Kuala Lumpur.

More about Seann

Sources

Checked 20 October 2026.

Formulas and definitions on this page are standard calculations; the worked example uses made-up figures, not data from any property.

General information, checked on the date shown, not legal, tax or financial advice. Rules and fees change; confirm them for your purchase with the state land office, a lawyer or a tax adviser. Seann Siow, REN 34312.