The short answer
Rental yield is the rent a property earns in a year as a share of its price.
- Gross yield = yearly rent ÷ price × 100
- Net yield = (yearly rent − yearly costs) ÷ price × 100
Net is the more realistic figure, because it takes out what you pay to own and let the unit. In a made-up example on a RM 500,000 home rented at RM 2,000 a month, gross is 4.8% and, after yearly costs of RM 7,200, net is about 3.4%. These numbers only show the method; they say nothing about any real project or area. Want me to work it out for your own case? WhatsApp +60 17-279 8932.
Why yield matters
Price alone does not tell you whether a unit will pay its way as a rental. Yield turns rent and price into one figure you can compare: one unit against another, or a property against other uses of your money.
But yield only means something if the inputs are real. A yield built on an asking rent nobody pays, or that leaves out costs, looks better than the unit will ever be.
Gross yield, step by step
Formula: monthly rent × 12 ÷ price × 100
A made-up example:
| Input | Figure |
|---|---|
| Price | RM 500,000 |
| Monthly rent | RM 2,000 |
| Yearly rent | RM 24,000 |
| Gross yield | 24,000 ÷ 500,000 × 100 = 4.8% |
Gross yield is quick and useful for a first look. Its weakness is that it treats every ringgit of rent as yours to keep.
Net yield, step by step
Formula: (yearly rent − yearly costs) ÷ price × 100
The costs that belong in it
| Cost | What it is |
|---|---|
| Maintenance fee | Monthly charge for upkeep of a strata building |
| Sinking fund | Saved for major repairs; at least 10% of the maintenance charge under the Strata Management Act 2013 |
| Assessment (cukai taksiran) | Local council tax, usually paid twice a year |
| Quit rent (cukai tanah) | Yearly land tax to the state |
| Insurance | Fire insurance for the unit, and any landlord cover |
| Repairs and upkeep | Air-conditioner servicing, fixing fittings, repainting between tenants |
| Agent fee | Paid when a new tenancy is arranged |
| Empty months | Rent lost between tenants |
The maintenance fee guide explains the first two in detail.
The same made-up example, net
| Item | Yearly amount |
|---|---|
| Yearly rent | RM 24,000 |
| Maintenance fee and sinking fund | RM 4,200 |
| Assessment and quit rent | RM 800 |
| Insurance | RM 200 |
| Repairs and upkeep | RM 1,000 |
| Agent fee, spread over the tenancy | RM 1,000 |
| Total yearly costs | RM 7,200 |
| Rent after costs | RM 16,800 |
| Net yield | 16,800 ÷ 500,000 × 100 = 3.36% |
With one empty month a year: the rent falls to RM 22,000, rent after costs to RM 14,800, and net yield to about 2.96%.
Every figure in these tables is invented to show the arithmetic. Use the real maintenance charge, assessment and quit rent for the unit you are looking at.
Which price to divide by
Most people divide by the purchase price. Some add the one-off buying costs, such as stamp duty, legal fees and furnishing, to the price, which gives a lower and more honest figure.
| Base | Example | Net yield |
|---|---|---|
| Price only | RM 500,000 | 3.36% |
| Price plus RM 30,000 of buying and furnishing costs | RM 530,000 | about 3.17% |
Pick one method and use it the same way for every unit you compare.
What net yield leaves out
The loan. Net yield measures the property before financing. Your own cash flow after the instalment is a separate question. A unit can have a reasonable net yield and still cost you money each month if the loan is large. Look at both.
Tax. Rental income is taxable, and some expenses can be deducted. How it applies depends on your situation, so check with LHDN or a tax adviser. This page does not give tax rates.
Price changes. Yield says nothing about what the property will be worth later. This page makes no prediction on prices. When you sell, RPGT may apply; see the RPGT guide.
Common mistakes
- Using asking rent. Listings show what owners hope for. Use rents actually agreed, where you can find them.
- Leaving out costs. Gross yield quoted as if it were net.
- Forgetting empty months. Even a short gap between tenants takes a slice of the year.
- Mixing methods. Comparing one unit's gross with another's net.
- Trusting a promised yield. Treat any figure you are offered as a claim to check, not a fact. Work it out yourself from real inputs.
Long-term or short-stay letting
The formulas are the same, but short-stay letting brings extra costs, such as cleaning, utilities, platform fees and an operator, and depends on whether the building allows it. The long-term vs short-stay guide works through the comparison.
Check before you sign
This page explains how to calculate rental yield. It is not financial or tax advice and gives no yield figures for any project or area. Before you buy to let, gather the real maintenance charge, assessment, quit rent and achieved rents for the specific unit. For help with a specific property, WhatsApp Shyan Yee (REN 46305, IQI Realty) at +60 17-279 8932.
Frequently Asked Questions
What is rental yield?
The yearly rent from a property divided by its price, shown as a percentage. It tells you how much rent the property produces for each ringgit of its price.
What is the difference between gross and net rental yield?
Gross yield uses the full yearly rent. Net yield first subtracts the yearly costs of owning and letting the unit, such as maintenance fees, sinking fund, assessment, quit rent, insurance, repairs and agent fees. Net is closer to what you actually keep.
How do I calculate gross rental yield?
Monthly rent × 12 ÷ price × 100. For a made-up example, RM 2,000 a month on a RM 500,000 home is RM 24,000 a year, or 4.8% gross.
Should I include the loan instalment in net yield?
Usually not. Net yield measures the property itself, before financing, so two buyers with different loans can compare the same unit. Look at your cash flow after the instalment separately.
Does this page say what yield a project or area gives?
No. The numbers here are invented to show the method. Rents, prices and costs differ by unit and change over time, so work it out from real figures for the unit you are looking at.
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