Rental Yield: Calculation Methods and Benchmarks

Rental yield is calculated by relating annual rental income to the total acquisition cost. Three levels of calculation are distinguished: gross yield (rent / purchase price), net yield (rent minus charges / purchase price plus costs) and net-net yield (after tax). In Paris in 2026, the average gross yield sits between 2.5% and 4% depending on the arrondissement, compared with 4% to 7% in the inner suburbs of Île-de-France.

Introduction

Rental yield is the primary criterion for evaluating a property investment. Yet its reading is often skewed by incomplete calculations or inadequate comparisons. A gross return of 5% may mask a net-net yield of 2% once charges and taxation are factored in. Conversely, a modest gross return of 3% in Paris can prove performant thanks to capital appreciation of 2 to 3% per year.

This guide presents the calculation formulas, the charge items to include and realistic benchmarks for Paris and Île-de-France in 2026.

Table of contents

• How do you calculate gross rental yield?
• Which charges must you deduct to get the net yield?
• How much does tax take out of the return?
• What yield should you target by arrondissement in Paris?
• How do you improve the yield of a Paris investment?
• Frequently asked questions

How do you calculate gross rental yield?

Gross yield is calculated as follows: (annual rent / acquisition price) x 100. The acquisition price used here is the net vendor price only: some simulations, such as our real return analysis, instead relate the rent to the total amount invested, notary fees included, which mechanically lowers the result by 7 to 8%, or about 0.3 points on a 4% yield. It is a first-pass indicator, useful for quickly comparing properties, but insufficient for making an investment decision.

Example: a 25 m² studio in the 20th arrondissement bought for 200,000 euros and let at 750 euros/month generates a gross yield of (9,000 / 200,000) x 100 = 4.5%. A 45 m² two-room flat in the 6th arrondissement bought for 650,000 euros, or 14,500 euros/m², and let at 1,550 euros/month generates (18,600 / 650,000) x 100 = 2.9%.

Gross yield does not account for notary fees (7 to 8% for resale properties), any works, or charges. It systematically overstates the real return on the investment. Its usefulness is limited to a first-pass comparison filter.

Which charges must you deduct to get the net yield?

Six items: property tax, non-recoverable service charges, non-occupant owner insurance, letting management, vacancy and a works provision. Together they absorb 30 to 40% of the rent on a Paris property and cost 1 to 2 points of yield.

Net yield after charges is calculated as follows: ((annual rent minus annual charges) / (acquisition price + notary fees + works)) x 100. The charges to include are property tax, non-recoverable service charges (approximately 20 to 30% of total charges), non-occupant owner insurance (PNO), letting management fees (if delegated, 6 to 8% of rents), a vacancy provision (one month of rent per year as a prudent estimate, one third of a month if you assume a tenant change every three years), and a provision for works and maintenance (approximately 1% of the purchase price per year over the long term).

Returning to the 20th arrondissement studio example. Purchase price 200,000 euros + notary fees 15,000 euros = 215,000 euros. Annual rent: 9,000 euros. Net yield: (5,470 / 215,000) x 100 = 2.5%.

Charge item	Annual amount
Property tax	€800
Non-recoverable service charges	€600
Non-occupying owner insurance (PNO)	€250
Letting management	€630
Vacancy provision	€750
Repairs and maintenance provision	€500
Total charges	€3,530

Those €3,530 absorb 39% of the €9,000 of annual rent. None of these items is optional: the last three are provisions that many investors leave out of their calculation, and they are precisely what separates a headline yield from a banked one.

Moving from one level of calculation to the next gives this.

Level of calculation	Formula applied to the studio	Result
Gross yield	9,000 / 200,000	4.5%
Net yield after charges	5,470 / 215,000	2.5%
Net-net yield	After tax, depending on the regime	1.5% to 2.5%

The gap between gross yield (4.5%) and net yield (2.5%) is 2 percentage points. This differential is typical of a Parisian investment. The older the property and the higher the service charges, the wider the gap. The co-ownership summary sheet enables precise charge estimation before purchase.

How much does tax take out of the return?

Between 0 and 1 point depending on the regime: nil under LMNP on actual expenses thanks to depreciation, but around 33% of rents for unfurnished letting under micro-foncier for an investor in the 30% bracket. Net-net yield factors in this taxation and therefore depends on the chosen tax regime and the investor’s marginal rate.

For unfurnished letting under the micro-foncier regime (rental income below 15,000 euros/year), a flat 30% allowance applies. The taxable income is therefore 70% of rents, taxed at the marginal rate plus 17.2% social contributions. For an investor in the 30% bracket, the total tax is 70% x (30% + 17.2%) = 33% of rents.

For unfurnished letting under the real regime, actual charges (loan interest, works, charges) are deducted from rents. Any resulting property deficit is deductible from general income up to 10,700 euros/year. This regime is almost systematically more advantageous than micro-foncier as soon as a loan is in place.

For furnished letting (LMNP under the real regime), depreciation of the property and furniture creates accounting charges that significantly reduce, or even eliminate, taxable income. A property depreciated over 25-30 years (excluding land) generates a significant annual depreciation charge. This is the most favourable regime for net-net yield. Our guide to furnished letting details this mechanism.

For the 20th arrondissement studio under LMNP real regime, with annual depreciation of 5,600 euros (depreciable base of 140,000 euros over 25 years) and deductible charges of 3,530 euros, taxable income is nil (9,000 euros minus 5,600 euros minus 3,530 euros is less than zero). The net-net yield then equals the net yield: 2.5%.

What yield should you target by arrondissement in Paris in 2026?

From 2 to 2.5% gross in the most expensive arrondissements (6th, 7th) to 4% in the north and east of the capital, with a Paris average between 2.5 and 4%. The inner suburbs rise to 4 or 5.5%.

Within Paris, average gross yields therefore vary significantly by area. Western and central arrondissements (1st to 8th, 16th) show 2 to 3% gross, constrained by per-m2 prices of 10,000 to 14,500 euros but supported by very strong rental demand. Left Bank arrondissements (5th, 13th, 14th, 15th) sit between 3 and 3.5%. Eastern and northern arrondissements (10th, 11th, 12th, 18th, 19th, 20th) offer 3.5 to 4% on average, with more accessible acquisition prices (8,200 to 9,500 euros/m²) and proportionally higher rents; studios and small units, whose rent per square metre is higher, often exceed that level, like the 20th arrondissement studio used as an example above at 4.5% gross.

In the inner suburbs of Île-de-France, gross yields are higher: 4 to 5.5% in Asnières-sur-Seine, Montreuil or Saint-Denis. Our analysis of rental investment in Asnières illustrates the potential of these towns.

In the outer suburbs, gross returns can reach 6 to 7%, but rental demand is weaker and vacancy higher. The yield rate must be weighed against vacancy risk and the property’s resale liquidity.

The yield indicator should not be analysed in isolation. In Paris, the historical capital appreciation of 2 to 3% per year complements a modest rental yield. The total return (rental plus appreciation) thus reaches 5 to 7% long-term in central arrondissements, a level comparable to equity markets, with lower volatility.

How do you improve the yield of a Paris investment?

Four levers, in order of impact: the purchase price (a 10% discount adds 0.3 to 0.5 points of gross yield), furnished letting (10 to 15% more rent), shared housing (15 to 25% more per square metre) and renovation works. Several strategies can therefore improve the yield of a Parisian rental investment. Switching to furnished letting increases rent by 10 to 15% compared with unfurnished letting, while offering a more favourable tax framework through depreciation. Shared housing allows a large apartment to be let room by room, with a yield 15 to 25% higher per square metre.

Buying below market price, via the off-market network, mechanically improves yield by reducing the equation’s denominator. A 10% discount on the purchase price increases gross yield by 0.3 to 0.5 percentage points.

Renovating a deteriorated property combines capital appreciation and property deficit. The price gap between a property needing renovation and a renovated one in the same neighbourhood is often 15 to 25%, while the works cost represents 10 to 15% of the purchase price.

Our property hunters specialising in rental investment integrate the yield calculation from the property shortlisting stage. Every opportunity is analysed from the perspective of gross, net and net-net return, taking into account the investor’s specific tax situation.

Frequently asked questions

What is the average rental yield in Paris in 2026?

The average gross rental yield in Paris ranges between 2.5% and 4% in 2026, depending on the arrondissement and property type. Outer arrondissements (18th, 19th, 20th) offer the highest gross returns (3.5-4%), while central arrondissements (6th, 7th) sit around 2-2.5%.

What is the difference between gross, net and net-net yield?

Gross yield relates annual rent to the purchase price. Net yield deducts charges (property tax, non-recoverable service charges, management fees, insurance, vacancy). Net-net yield also factors in tax on rental income. The gap between gross and net-net is typically 1.5 to 2.5 percentage points.

What rental yield is considered good for a Paris investment?

In Paris, a net yield of 2.5% to 3% is considered acceptable, given the strong long-term capital appreciation. In Île-de-France, investors generally target 4% to 5% net to compensate for more uncertain capital growth.

How does shared housing improve rental yield?

Shared housing allows a large apartment to be let room by room, often at 15% to 25% more per square metre than a standard rental. A 4-room flat let at 2,000 euros/month on a standard basis can generate 2,400 to 2,600 euros/month as a shared let, improving gross yield by approximately 1 percentage point.

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Looking for a profitable rental investment in Paris or Île-de-France? Our property hunters analyse every property from a net-net yield perspective before presenting it to you. Contact us to define your target return.