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Rental Yield: What Actually Counts, And What Gets Left Out
Gross yield is a headline. Net yield — after maintenance, property tax, agent fees, vacancy and income tax — is the number that decides whether a property carries itself.
Madison Heng
Singapore Real Estate Advisor
- Published
- Last updated
- Reading time
- 3 min read
Rental yield gets quoted the way weather gets discussed: confidently, briefly, and usually without the qualifications that would make it useful.
The short answer
- Gross yield is annual rent divided by price. It ignores every cost of holding the property.
- Net yield subtracts maintenance, property tax, insurance, repairs, agent commission and vacancy.
- The gap between the two is not small, and it is where most optimistic plans come apart.
- Yield is only half the question. Holding power — whether you can carry the property through a vacant period — is the other half.
Gross yield, and why it is not enough
Gross yield is annual rent divided by purchase price, expressed as a percentage. It is easy to calculate, easy to compare, and easy to quote — which is exactly why it appears everywhere.
What it leaves out is everything that happens between the tenant paying and the money being yours.
What net yield actually subtracts
Maintenance fees. Payable monthly whether or not the unit is tenanted. Larger in projects with extensive facilities — the very projects that often command higher rents.
Property tax. A property that is not owner-occupied is taxed differently from one that is. Check the current rates with IRAS; they have been revised.
Agent commission. Payable on securing a tenant, and again on renewal in many cases.
Repairs and replacement. Air-conditioning servicing, appliances, plumbing, wear on fittings. Small individually, persistent collectively.
Insurance. Modest, but real.
Vacancy. The single most underweighted line. A unit vacant for two months in a year loses roughly a sixth of that year's rent, while every fixed cost continues.
Income tax. Rental income is taxable, with deductible expenses allowed.
The discipline
Model the year with a realistic vacancy assumption, not a perfect one. If the property only works at full occupancy, it does not work.
An illustrative structure
Illustrative only
The figures below are invented round numbers used to show the shape of the calculation. They are not market data and should not be read as typical.
| Line | Annual |
|---|---|
| Rent collected at full occupancy | $60,000 |
| Less: assumed vacancy | −$5,000 |
| Less: maintenance fees | −$4,800 |
| Less: property tax | −$3,000 |
| Less: agent commission | −$2,500 |
| Less: repairs, servicing, insurance | −$2,000 |
| Net before income tax | $42,700 |
Illustrative example only. Your own figures depend on the property, the project and the current tax treatment.
In this illustration, the headline rent is a quarter higher than what the owner is actually left with — before income tax. That gap is the entire point of the exercise.
Yield is only half the question
The other half is holding power.
A property with a modest net yield and an owner who can comfortably carry it through a vacant quarter is a stable position. A property with a higher yield and an owner who needs every month of rent to make the mortgage is a fragile one — and fragility is what turns an ordinary market dip into a forced sale.
My opinion
I would rather a client hold a property with a slightly lower yield in a location with consistent tenant demand than chase a higher number somewhere the demand is thinner. Yield is a ratio. Tenant demand is what makes the ratio real.
What to check before buying for rental
- What are comparable units actually renting for? Rental contract data for private residential property is published by URA. Use it.
- Who is the tenant? Proximity to employment, transport, international schools and amenities determines how quickly a unit lets, and at what price.
- What is the competing supply? In the project, and in projects completing nearby over the next few years.
- What happens between tenants? Not whether it will happen — how long you can carry it when it does.
- What does the exit look like? A property bought for yield still has to be sold eventually, usually to someone buying it to live in.
Last updated 11 September 2026Based on publicly available Singapore property data
Sources & where to verify
- URA — Private residential rental contract data
- IRAS — Property tax rates and taxation of rental income
Rules, rates and published figures change. Check the current position on the official source before you act on anything here.
Frequently asked questions
What is the difference between gross and net rental yield?
Gross yield is annual rent divided by purchase price. Net yield subtracts the costs of actually holding and letting the property — maintenance fees, property tax, insurance, repairs, agent commission and an allowance for vacancy — before dividing. Net yield is the number that reflects reality.
Is rental income taxed in Singapore?
Yes. Rental income is taxable, with deductible expenses allowed. Property tax rates for a property that is not owner-occupied also differ from owner-occupier rates. Check the current treatment with IRAS, as both the rates and the rules on deductions have been revised over time.
How much vacancy should I assume?
There is no correct figure, and it depends on the property and the market. The discipline that matters is assuming some vacancy rather than none. A model that assumes a tenant is in place every month of every year is not a model — it is a wish.
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