Gross rental yield
A buy-to-let return indicator calculated by dividing the annual gross rent by the total acquisition price (price + fees) multiplied by 100. It does not account for expenses, taxes, or vacancy periods. The broker uses it as a first screening metric before computing the net yield and actual monthly savings effort.
Key points
- Formula: (annual gross rent / total acquisition cost) × 100.
- It does not account for charges, taxes, or rental vacancy periods.
- Used as an entry-level filter to quickly compare multiple properties.
- A high gross yield can mask significant charges or a sluggish rental market.
Frequently asked questions
Why is gross yield insufficient for making an investment decision?
Gross yield ignores the costs that genuinely affect returns: property tax, non-recoverable co-ownership charges, landlord insurance, property management fees, and periodic works. Once these are deducted, the net yield can be significantly lower. Comparing two properties on gross yield alone can therefore lead to choosing the wrong project.
What minimum gross yield should be targeted for a viable buy-to-let in France?
There is no universal threshold: it depends on location, property type, tax regime, and financing level. In practice, many investors consider that a gross yield below 4–5% in major cities is hard to make tax-neutral without leverage or an optimised tax regime. The broker always completes the analysis with the after-all-costs net yield and monthly cash flow.
How do you move from gross yield to net yield?
Net yield is obtained by deducting all annual costs (property tax, non-recoverable co-ownership charges, insurances, management fees, provisioned works) from the annual gross rent, then dividing this net income by the total acquisition cost. Adding the actual tax on rental income produces the net-net yield, which represents the investor's actual return.
In practice
A property purchased for €200,000 (all-in) generates €900/month in rent, or €10,800 annually. Its gross yield is 5.4%. Once €2,800 in annual costs are deducted, the net yield falls to 4%, which is the broker's actual working figure.
Official sources
- Housing and financing information · ANIL
- Mortgage credit (official guide) · Service-Public.gouv.fr