Glossary / Property

Gross rental yield

Gross rental yield is annual rent divided by the purchase price, expressed as a percentage, before any running cost or acquisition cost is deducted.

It is the number in the listing, and it is the easiest yield to calculate because it ignores everything that happens after the sale. Annual rent over price, and stop.

That makes it useful for one thing only: comparing two properties in the same market on the same basis, quickly. It is not a return, it is not income, and it is not what reaches your account.

Where people get it wrong

Treating it as the return. In Dubai the gap between gross and net is typically two to three percentage points, which is often more than half of the number.

The framework behind it Net rental yield sets out the rule, the arithmetic and where it breaks.

Read the framework

Related terms

Net rental yield Net rental yield is annual rent minus every running cost, divided by the purchase price plus every acquisition cost, which makes it the only yield figure that describes money actually reaching the owner. Service charge A service charge is the annual fee an apartment owner pays the owners association for maintaining shared parts of the building, quoted in Dubai as dirhams per square foot per year and levied whether or not the unit is occupied. Void period A void period is time during which a rental property has no paying tenant, and it is a cost rather than an absence of income because the service charge, mortgage and maintenance continue throughout.

Investments Playbook publishes educational research and general information. Nothing on this site is personal investment advice, a solicitation, or a recommendation to buy or sell any asset. Property and securities can fall in value. Past performance does not predict future returns. Figures shown are indicative and may be delayed. Always take regulated professional advice before acting.