How to Calculate Rental Yield

Rental yield is the annual return on a property investment expressed as a percentage of the property's value or purchase price. Gross yield uses rental income before expenses. Net yield deducts all costs and gives the true return. Understanding both is essential for comparing buy-to-let properties and assessing whether the investment makes financial sense against alternative uses of capital.

rental-yield property investment buy-to-let gross-yield net-yield

Quick reference

Gross yield formula

Annual rent / Property value × 100

Before expenses — headline figure only

Net yield formula

(Annual rent - Costs) / Property value × 100

True return after all expenses

Acceptable net yield (NL)

3 to 5%

Varies significantly by city and property type

Good net yield

Above 5%

Harder to find in major Dutch cities in 2025

Gross and net rental yield formulas

Formula

\text{Gross Yield} = \frac{\text{Annual Rent}}{\text{Property Value}} \times 100 \\ \text{Net Yield} = \frac{\text{Annual Rent} - \text{Annual Costs}}{\text{Property Value}} \times 100

For gross yield: divide annual rental income by property purchase price and multiply by 100. For net yield: subtract all annual ownership costs from annual rent before dividing. Net yield is always lower than gross yield.

Annual RentTotal rental income for the year — 12 months multiplied by monthly rent, assuming full occupancy

Property ValuePurchase price including purchase costs (transfer tax, notary, agent fees)

Annual CostsAll expenses: mortgage interest (if leveraged), maintenance, insurance, management fees, void periods, service charges

Worked examples

Example 1Amsterdam apartment — gross vs net yield

Given: Purchase price: 380.000 | Monthly rent: 1.600 | Annual costs: mortgage interest 9.120 + maintenance 2.000 + insurance 600 + management 1.920 + void allowance 1.600 = 15.240

Result: Annual rent: 19.200 | Gross yield: 5,05% | Net yield: 1,04%

Annual rent: 1.600 x 12 = 19.200. Gross yield: 19.200 / 380.000 x 100 = 5,05%. Net yield: (19.200 - 15.240) / 380.000 x 100 = 3.960 / 380.000 = 1,04%. The gross yield of 5% appears attractive but the true net yield of 1% — after costs typical for a leveraged purchase — is barely above inflation. This illustrates why gross yield is misleading without cost analysis.

Example 2Regional Netherlands — cash purchase

Given: Purchase price: 180.000 | Monthly rent: 900 | Annual costs: maintenance 1.500 + insurance 400 + void allowance 900 = 2.800 | No mortgage

Result: Annual rent: 10.800 | Gross yield: 6,0% | Net yield: 4,44%

Annual rent: 900 x 12 = 10.800. Gross yield: 10.800 / 180.000 = 6,0%. Net yield: (10.800 - 2.800) / 180.000 = 8.000 / 180.000 = 4,44%. With no mortgage, costs are lower and the net yield is substantially better. Regional properties with lower purchase prices often deliver better net yields than major city properties.

Example 3Comparing two properties — why net yield matters

Given: Property A: 250.000 purchase, 1.100/month rent (5,28% gross) | Property B: 320.000 purchase, 1.380/month rent (5,18% gross)

Result: Property A net yield: 3,8% | Property B net yield: 4,2% | Property B is better despite lower gross yield

Property A costs (including higher maintenance on older property): 3.000 per year. Net: (13.200 - 3.000) / 250.000 = 4,08%. Property B costs (newer building, lower maintenance): 2.400 per year. Net: (16.560 - 2.400) / 320.000 = 4,43%. Property B's lower gross yield masks a better net return because of lower ownership costs. Gross yield comparison alone would incorrectly favour Property A.

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Costs that reduce gross to net yield

Cost Category	Typical Annual Amount	Notes
Mortgage interest	3 to 5% of loan value	Only the interest portion — principal is equity building
Maintenance and repairs	1% of property value	Budget 1% of value annually for long-term average
Insurance	0,1 to 0,2% of value	Building insurance — not contents (tenant pays)
Property management	8 to 12% of rent	If using an agent — skip if self-managing
Void periods	5 to 8% of annual rent	Budget for 3 to 4 weeks vacancy per year
Service charges	Varies	For apartments — check VvE contribution
Ground rent (erfpacht)	Varies	For leasehold properties in Netherlands

Common mistakes when calculating rental yield

✗ Using monthly rent without annualising

✓ Rental yield uses annual figures. Multiply monthly rent by 12 to get annual rent before calculating yield. A 1.200 monthly rent is 14.400 per year. Dividing monthly rent by property value gives a figure 12 times too low.

✗ Not including purchase costs in the denominator

✓ The true investment includes not just the purchase price but also transaction costs: Dutch overdrachtsbelasting (transfer tax, 10,4% for investment properties in 2025), notary fees, estate agent commission, and survey costs. A 300.000 property with 12% in transaction costs requires 336.000 of total capital. Using 300.000 in the denominator overstates the yield.

✗ Ignoring void periods in the income calculation

✓ Assuming 100% occupancy (12 months of rent per year) overstates yield. Even good properties have void periods between tenants — repairs, advertising, tenant selection. Budget for 3 to 4 weeks of void per year (approximately 6 to 8% of annual rent) when calculating realistic income.

✗ Comparing gross yield to bank savings or bond rates

✓ A 5% gross rental yield is not comparable to a 5% savings rate. The savings rate requires no management, carries no void risk, no maintenance cost, no liquidity risk, and no concentration of capital in a single asset. The appropriate comparison is net rental yield after all costs — which is typically 2 to 3 percentage points lower than gross yield for leveraged properties.

Methodology

Gross yield calculated as annualised rent divided by total property purchase cost (including transaction costs). Net yield deducts all annual ownership costs from annual rent before dividing. Void period assumed at 4 weeks (7,7% of annual rent) unless stated. Netherlands transfer tax at 10,4% for non-primary-residence purchases.

Dutch transfer tax for investment properties is 10,4% in 2025. For owner-occupied primary residences purchased by buyers over 35 the rate is 2%. Starters aged 18 to 34 buying their first home below a value threshold pay 0% transfer tax. Always verify current transfer tax rates as these change periodically.

Cite this guide

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https://calquify.com/guides/how-to-calculate-rental-yield

Last updated: May 2026

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Frequently asked questions

What is a good rental yield in the Netherlands?

In Amsterdam and other major Dutch cities, gross yields on residential property have compressed to 4 to 6% as prices have risen faster than rents. Net yields in Amsterdam after all costs — particularly the 10,4% transfer tax, high purchase prices, and maintenance — are typically 1 to 3%. In regional cities like Eindhoven, Groningen, and Tilburg, gross yields of 5 to 7% and net yields of 3 to 5% are achievable. For a property investment to be financially rational versus other investments, a net yield of at least 3% after all costs is generally considered the minimum threshold.

How does the 10,4% transfer tax affect rental yield?

The overdrachtsbelasting of 10,4% for non-primary-residence properties dramatically increases the capital required and reduces the yield. On a 300.000 property, the transfer tax adds 31.200 — bringing total investment to 331.200 plus notary and agency fees. Using the correct denominator of approximately 345.000 total investment rather than 300.000 reduces the apparent gross yield from 5,05% (at 300.000) to 4,35% (at 345.000). This is why buy-to-let in the Netherlands requires significantly higher rental income to justify the investment compared to owner-occupied properties.

What is the difference between rental yield and cap rate?

Cap rate (capitalisation rate) is the US/commercial real estate equivalent of net rental yield. It is calculated as net operating income (NOI) divided by property value, where NOI excludes mortgage interest — making it independent of financing structure. Net rental yield in the UK and Netherlands context often includes or excludes mortgage interest depending on the presenter's approach. Cap rate is more standardised for commercial property comparison. For residential property, net yield (excluding mortgage interest) and cap rate are essentially the same concept.

Sources & References

› Investopedia — Rental Yield Retrieved 2026-05-18

› Pararius NL — Huurprijzen statistieken Retrieved 2026-05-18

Formula based on standard mathematical and financial methods. Results are for informational purposes. Last reviewed May 2026. Version 1.