How do I calculate the rental yield of my property?

This answer was reviewed against official sources on 2026-10-05

Short answer

Gross rental yield = annual rent ÷ purchase price × 100. Net rental yield takes the rent you actually collect after vacant months, subtracts the annual costs the owner bears, divides the result by the purchase price plus purchase costs, and multiplies by 100. Example: an apartment bought for SAR 800,000 and let for SAR 48,000 a year has a 6% gross yield; with one vacant month, SAR 6,000 of annual costs and SAR 63,000 of purchase costs, its net yield is about 4.4%.

What to deduct for net yield

Count only what the owner actually bears during the year, not what the tenant pays. The main items:

Vacancy: the rent you lose in months when the unit stands empty.
Maintenance: the lessor must make the necessary repairs that keep the property fit for use unless agreed otherwise (Civil Transactions Law, Article 419), and the unified residential lease also puts routine maintenance of the unit and upkeep of common areas on the lessor.
Management: a real estate office’s fee if you hand it the management, as agreed between you.
Ejar fees: borne by the lessor; SAR 125 per contract year for a residential lease, and SAR 200 for the first year then SAR 400 for each additional year for a commercial lease, payable again on renewal.
Building insurance, service charges the authorities impose on the unit, and any services you do not recover from the tenant.

When VAT matters

Residential rent is exempt from VAT (VAT Implementing Regulations, Article 30), and ZATCA’s guideline explains that a lessor making this exempt supply cannot deduct the VAT paid on related costs, so count residential running costs including VAT.

On commercial rent, a VAT-registered lessor adds 15% and remits it to ZATCA, so calculate the yield on the rent before VAT. A registered person may deduct input VAT to the extent purchases are used for taxable supplies (Article 49 of the Implementing Regulations), so count the costs of that letting net of deductible VAT.

Payback period and the limits of the figure

Payback in years = (price + purchase costs) ÷ annual net income. It assumes rent and costs stay flat, and it ignores changes in the property’s own value and how the purchase was financed.

Be careful when projecting rent: inside the Riyadh urban area, the statutory provisions froze increases in total rent on residential and commercial leases for 5 years from 25 September 2025, and a vacant unit that was let before cannot be let above its last registered lease unless REGA accepts the lessor’s objection. Outside the Riyadh urban area, automatic renewal keeps the same rent unless the lessor files an adjustment request on Ejar at least 90 days before the lease ends and the tenant accepts it; if the tenant rejects it, automatic renewal is cancelled.

For real figures on rents and prices, REGA’s Real Estate Indicators Platform shows the Average Rental Value per Unit for residential units by region, city, district and unit type, drawn from Ejar data and updated monthly, and it shows the number and value of property sales from Ministry of Justice and Real Estate Registry data, updated quarterly.

Steps

Take the annual rent agreed in the lease, excluding any VAT: SAR 48,000 in our example.
Gross yield: 48,000 ÷ 800,000 × 100 = 6%.
Deduct vacancy: with one empty month, collected rent is 48,000 × 11 ÷ 12 = SAR 44,000.
Subtract the annual costs you bear, assumed here at SAR 6,000 including the SAR 125 Ejar fee: net income = 44,000 − 6,000 = SAR 38,000.
Add purchase costs to the price: 800,000 + 63,000 = SAR 863,000. The assumed 63,000 covers the 5% real estate transaction tax (SAR 40,000) if you agreed with the seller to bear it, a 2.5% broker commission (SAR 20,000) if you hired the broker, and 15% VAT on it (SAR 3,000) if the broker is VAT-registered.
Net yield and payback: 38,000 ÷ 863,000 × 100 ≈ 4.4%, and 863,000 ÷ 38,000 ≈ 22.7 years.

Calculate it: Rental Yield CalculatorGross and net rental yield and payback period for any property.Calculate it: Real Estate Transaction Tax (RETT) Calculator5% tax on property sales, and what the state bears for a first home.Calculate it: Real Estate Brokerage Commission CalculatorBroker commission on sales and leases (2.5%) with VAT.Calculate it: Ejar Lease Fees CalculatorEjar documentation fees: SAR 125 per year residential, SAR 200 then 400 commercial.

Follow-up questions

Is gross yield enough to compare properties?

It works as a quick screen between similar listings, but it ignores vacancy, running costs and purchase costs, and the ranking of properties can change once net yield is worked out.

Why add purchase costs to the price?

They are part of what you actually paid to own the property, so net yield then measures the return on the whole outlay. Some calculations divide by the price alone, which gives a slightly higher figure; what matters is using the same method when comparing.

Should I deduct mortgage payments from the yield?

Not in this formula, which measures the property’s return on its full cost however it was financed. If you bought with finance, compare net income with the instalments in a cash-flow calculation to see what you actually keep.

Official sources

General information for guidance, not legal advice; the governing regulations and official bodies are the final reference.

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