Gross yield vs net yield: the number that actually matters
- Gross yield = annual rent ÷ property value. Net yield subtracts operating expenses first.
- Listings advertise gross yield. Net yield is the number that tells you if the property actually pays.
- In Australia, a negative net yield may be partially offset by negative gearing deductions.
- In New Zealand and the UK, the same shortfall has a higher real cost.
Every property listing shouts its gross yield. Almost none of them mention net yield — the number that tells you whether the property actually pays for itself once rates, insurance, management fees and maintenance are taken into account.
Gross yield
Gross yield is simple: annual rent divided by property value, expressed as a percentage.
Gross yield = (weekly rent × 52 ÷ property value) × 100It’s useful for a first-pass comparison across listings, but it ignores every ongoing cost of actually owning the property.
Net yield
Net yield subtracts annual operating expenses — council rates, insurance, property management fees, maintenance — before dividing by property value.
Net yield = ((annual rent − annual expenses) ÷ property value) × 100This is the number that should inform whether a property is a reasonable hold, not just a reasonable headline. When you add a property to prop-insights.app and run the insight report, net yield is what it’s built around — not the gross figure a listing advertises.
Why this differs by country
- Australia — net cashflow shortfalls may be tax-deductible under negative gearing, which changes the after-tax comparison materially.
- New Zealand — negative gearing deductions were abolished in 2021, so a negative net yield property costs more in practice than the raw number suggests.
- United Kingdom — Section 24 replaced full interest deduction with a 20% tax credit, hitting higher-rate taxpayers hardest.
The gross yield a listing advertises is the same calculation in all three markets. What a negative net yield actually costs you is three different answers.