Net yield
Net yield is annual rent minus all running costs and empty periods, divided by the full cost of buying the property, shown as a percentage.
What Net yield means for a buyer
Net yield measures what a let property actually earns for its owner:
(annual rent − annual costs) ÷ total purchase cost × 100
The costs to deduct in the UAE are service charges, any chiller capacity charge the owner bears, management and letting fees, repairs, insurance and an allowance for vacancy. The purchase cost should include the price plus the 4% transfer fee, registration fees and any commission.
An illustration, with invented figures. A 1,000 sq ft flat costs AED 1,500,000 and lets for AED 90,000, a gross yield of 6.0%. Deduct service charges of AED 15,000, management at 5% of rent (AED 4,500), AED 3,000 for repairs and insurance, and two weeks' vacancy (about AED 3,750). Net income is AED 63,750. Against a total cost of about AED 1,565,000, the net yield is 4.1%.
There is no annual property tax and no UAE income tax on an individual's rental income, which keeps the UAE's gap between gross and net narrower than in many countries. A UK resident, however, pays UK income tax on overseas rent, so the after-tax return is lower still; see UK tax on Dubai property.
No standard definition exists. Some sources deduct only service charges and call the result net. When comparing figures, ask which costs were included, and whether a mortgage was. Net yield before financing is the fair basis for comparing properties.
Related terms
Guides that use this term
Where Net yield comes up in practice, with the costs, rules and steps around it.
Questions about the buying process?
An adviser can explain how this applies to the property you're considering.
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