Rental Yield Calculator
Gross and net rental yield of a property after costs and vacancy, compared with an FD
| Item | Per year |
|---|---|
| Rent (12 months) | ā¹2,64,000 |
| Less: vacancy (1 month) | -ā¹22,000 |
| Less: maintenance | -ā¹36,000 |
| Less: property tax | -ā¹8,000 |
| Less: other costs | -ā¹12,000 |
| Net rent | ā¹1,86,000 |
| Money invested (price + purchase costs) | ā¹80,00,000 |
| FD interest at 7% on the same money | ā¹5,60,000 |
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Results are estimates, not financial advice. Rates, charges and rules change, so confirm with your bank, post office or a financial adviser before you decide. Terms of use
How to Use
- Enter the property price and the monthly rent it gets, or would get.
- Add what the owner pays: society maintenance (if it's on you), yearly property tax, and other costs such as repairs and insurance.
- Set how many months a year you expect the flat to be vacant. If you want, add purchase costs like stamp duty as a % of the price.
- Enter an FD rate to compare against. Gross and net yield change as you type.
- Scroll down to see where a year's rent goes, and the yearly table of income and costs.
What is rental yield?
Rental yield is the rent a property earns in a year, shown as a percentage of what it cost. It tells you how hard your money is working as a landlord, leaving aside any rise or fall in the property's price. This rental yield calculator lets you compare a flat with an FD, a debt fund or another property, and check whether a flat bought "for rental income" really pays.
Gross and net yield
Net rent = rent for the months let ā maintenance ā property tax ā other costs
Net yield = net rent Ć· (price + purchase costs) Ć 100
Gross yield is the number brokers like to quote. Net yield is what you actually earn once you take out the costs only an owner pays and the months the flat sits empty between tenants. If you add stamp duty, registration and brokerage as purchase costs, net yield is measured on all the money you put in.
Worked example
A flat costs ā¹80 lakh and rents for ā¹22,000 a month. The owner pays ā¹3,000 a month in maintenance, ā¹8,000 in property tax and about ā¹12,000 a year on repairs and insurance. They expect it to stay empty for 1 month a year.
| Item | Per year |
|---|---|
| Rent (12 Ć ā¹22,000) | ā¹2,64,000 |
| Less: 1 vacant month | āā¹22,000 |
| Less: maintenance (12 Ć ā¹3,000) | āā¹36,000 |
| Less: property tax | āā¹8,000 |
| Less: repairs and insurance | āā¹12,000 |
| Net rent | ā¹1,86,000 |
Gross yield = 2,64,000 Ć· 80,00,000 = 3.30%. Net yield = 1,86,000 Ć· 80,00,000 = 2.33%. Put the same ā¹80 lakh in an FD at 7% and you'd earn ā¹5,60,000 a year, three times as much. For the flat to match the FD, its price would have to rise by roughly 4.7% a year on top of the rent.
Typical residential yields in India
Gross yields on homes in large Indian cities are widely reported to be low, around 2ā4%, because prices are high compared with rents. Commercial property usually yields more, but vacancies last longer and the ticket sizes are bigger. Treat any figure you hear as a rough guide, and use the real rent and costs of the property you're looking at.
Things this calculation leaves out
- Price changes: your total return from property is rent plus the change in its price. Yield covers only the rent.
- Income tax: rent is taxed as income from house property. Municipal taxes paid are deducted first, then a 30% standard deduction on the rest. FD interest is taxed in full at your slab rate. Compare after-tax figures for your own slab.
- Home loan interest: if you borrowed to buy, the interest is a large cost (partly deductible from rental income). The yield here assumes the property is fully paid for.
- Rent increases: rents usually go up every 11 months to a year, which lifts the yield over time. Costs rise too.