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RentvsBuyIndia

Rental Yield Calculator for India

Enter a price and a rent for the gross yield. Leave the running costs at their defaults, or set your own, for the net yield the listing will not quote you.

The flat you're screening

₹

₹

Running costs (for net yield)

₹

₹

₹

₹

years

months

months rent

What you pay the agent to find each new tenant

What to judge it against

%/yr

%/yr

Nothing is financed here. These only price the gap between what the flat earns and what the money costs or could earn elsewhere.

Rental yield is the rent a property returns on its price, and it is the fastest way to sort a shortlist: two numbers, one ratio, no assumptions about the future. It is also the most over-read figure in Indian property, because it says nothing about the loan, the holding period, or appreciation. This calculator gives you both yields, then shows you exactly what the ratio leaves out.

How it works

  1. Enter the price and the monthly rent for the gross yield, the figure listings quote.
  2. The running costs, vacancy between tenants, and brokerage come off to give the net yield you actually keep.
  3. Both are set against the metro benchmark, your loan rate, and what the same money would earn invested.

Before you start

  • Price: use the current market value to judge whether to keep letting; use what you paid to judge the original purchase.
  • Vacancy: a month empty between tenants is normal in Indian metros, and it costs more yield than most owners expect.
  • Maintenance: society charges run ₹3 to ₹8 per sq ft a month, so a 1,000 sq ft metro flat lands near ₹42,000 a year.

You'll get

  • Gross and net rental yield, side by side
  • Where the rent goes, cost by cost
  • The rent or the price this flat would need to hit the metro benchmark
  • How the yield compares to your loan rate and to simply investing

How rental yield is calculated

Both yields are a year's rent expressed as a percentage of the price. They differ only in what comes off the rent first.

Gross yield

(monthly rent × 12) ÷ property price × 100

On the pre-filled flat: ₹20,000 × 12 = ₹2,40,000 a year, over ₹80,00,000, is 3.0%.

Net yield

(rent collected − maintenance − property tax − insurance − churn) ÷ property price × 100

Rent collected is the annual rent scaled by occupancy, and churn is the brokerage and repainting spread across the tenancy cycle.

Two choices in the net figure are worth stating plainly, because they change it:

  • Vacancy is a cost, not a footnote: if a tenant stays three years and the flat then sits empty for one month, you collect rent for 36 of every 37 months. That alone takes about 2.7% off the rent, before a single bill.
  • Churn is spread, not lumped: brokerage and repainting fall in the year a tenant leaves, but charging them whole to that year would describe an unlucky year rather than an ordinary one. They are averaged across the tenancy cycle, so the net yield describes a typical year of owning the flat.
  • Everything is pre-tax: rental income is taxable at your slab after the standard 30% deduction, and the right adjustment depends on your regime, so it stays visible here rather than being assumed.
  • Nothing is financed: yield describes the property, not your purchase of it. A cash buyer and a heavily leveraged buyer get the same yield on the same flat, and very different outcomes.

What rental yield cannot tell you

Yield is a screening ratio. It compares rent to price at one moment, which makes it ideal for cutting a list of twenty flats down to two, and unfit for deciding on either of them. Four things it leaves out are usually the four that settle the question:

  • The loan. Borrowing 80% at 8.75% against a flat yielding 3% is a very different proposition from paying cash, and the yield is identical in both cases.
  • Appreciation. The main return on Indian residential property has historically been the price, not the rent. Yield cannot see it at all.
  • Time. Purchase costs of 7% and selling costs of 2% are trivial across twenty years and ruinous across three. Yield has no holding period in it.
  • The alternative. The real question is never "is 3% good" but "is this better than the same money invested", and yield does not know what else you might do with it.

This is why a low Indian yield is not, on its own, a verdict against buying. It is a statement that the case has to rest on appreciation and leverage instead, which is exactly what the Property Investment Calculator models: the landlord path and the invest-the-same-money path, side by side, over the years you actually intend to hold. If you are choosing between renting a home and buying one to live in, the Rent vs Buy Calculator is the one you want.

Rental yield questions, answered

How do you calculate rental yield?

Gross rental yield is the annual rent divided by the property price, as a percentage: a flat costing ₹80 lakh let at ₹20,000 a month earns ₹2,40,000 a year, which is a 3% gross yield. Net rental yield subtracts what it costs to own the flat, including society maintenance, property tax, insurance, brokerage on each re-let, repainting between tenants, and the rent lost while it sits empty.

What is the difference between gross and net rental yield?

Gross counts the rent and nothing else, so it is the figure brokers and listings quote. Net subtracts the running costs and the vacant weeks, and typically lands 0.5 to 1.5 percentage points lower in India. Net is the honest number, because maintenance, tax, and tenant churn are not optional. Whenever a yield is quoted without saying which it is, assume gross.

What is a good rental yield in India?

Gross yields of 2.5% to 4% are normal for residential property in the large Indian cities, and 4% to 6% in many tier-2 cities. Against a fixed deposit paying around 6.5% to 7%, residential rent alone trails comfortably, so a "good" yield here means healthy for its city rather than high in absolute terms.

Does rental yield tell me whether to buy the property?

No, and that is the most important limit of the number. Yield ignores the loan, the holding period, price appreciation, and what your money would earn if you invested it instead. Those are what actually decide whether a purchase builds wealth. Yield is a screening ratio for narrowing a shortlist; use the Property Investment Calculator to decide on a specific flat.

Why is rental yield so low in India?

Because prices are set by expected appreciation and by owner-occupier demand, while rents are set by what local salaries can pay, and the two have been pulling apart for two decades. Buyers accept a low running return in exchange for the capital gain they expect. It is the same reason yields are lowest in the priciest areas, where the price has run furthest ahead of the rent.

Should I use the market price or the price I paid?

Use whichever question you are asking. The price you paid tells you the return on your original investment. The current market value tells you the return on capital you could release by selling, which is the figure that matters when deciding whether to keep letting the flat or sell it and invest elsewhere.

Is rental yield calculated before or after tax?

The figures here are pre-tax, consistent with the rest of this site. Rental income in India is taxable at your slab rate after a standard 30% deduction on net annual value and a deduction for home-loan interest, so your post-tax yield will be lower than the net yield shown. Since the right adjustment depends on your slab and regime, we show the pre-tax figure and leave it visible rather than burying an assumption in it.

Is my data stored when I use this calculator?

No. All calculations run in your browser; nothing you enter is sent to or stored on our servers.

Yield data for Indian cities