Rental Yield Calculator (India)

Rental yield is the annual rent expressed as a percentage of what the property cost. Gross yield ignores expenses and always flatters the asset. Net yield — after maintenance, property tax, vacancy and repairs — is the number that actually compares with a fixed deposit.

Indian residential yields are famously low: 2% to 3.5% net in most metros, against 6.5–7.5% on a fixed deposit. Residential property in India has historically been a capital-appreciation play, not an income one. Commercial and pre-leased assets run considerably higher.

Gross versus net

Gross yield = (monthly rent × 12) ÷ property cost × 100
Net yield = (effective rent − maintenance − property tax − repairs) ÷ property cost × 100

Two things make the honest number lower than the brochure number. First, use the all-in cost — price plus stamp duty, registration and interiors — not the headline price. Second, allow for vacancy: one month empty between tenants is 8.3% of the year gone.

A worked example

An ₹80 lakh flat let at ₹25,000: gross rent is ₹3,00,000, a gross yield of 3.75%. Take off 8% vacancy (₹24,000), ₹42,000 of society maintenance, ₹12,000 property tax and 5% for repairs (₹13,800), and net income is ₹2,08,200 — a net yield of 2.6%. The same ₹80 lakh in a 7% fixed deposit earns ₹5,60,000, so the flat is ₹3,51,800 a year behind on income alone. It has to appreciate to win.

Costs people leave out

• Income tax on rent — rental income is taxable at your slab, after a 30% standard deduction and any home-loan interest
• Brokerage on re-letting, usually a month's rent each time the tenant changes
• Repainting and deep cleaning between tenancies
• Society transfer and NOC charges in many housing societies

Frequently asked questions