Rental yield measures the income return on a property — annual rent divided by purchase price, expressed as a percentage. 'Gross yield' uses rent before any costs; 'net yield' deducts service charges, insurance, and management fees, giving a more realistic picture of actual cash return.
Why It Matters
- —Yield is the income half of total return — capital appreciation is the other half. Comparing markets on yield alone misses the full picture.
- —Off-plan buyers often see lower yields than ready-property buyers because price has been bid up by speculative demand — but benefit instead from capital growth during construction.
- —Always compare net, not gross, yield when evaluating markets — service charge load varies enormously by building and by market.