How Do You Calculate Rental Yield in New Zealand?
- Staircase Financial
- Oct 30
- 4 min read
Understanding how to calculate rental yield is essential for Kiwi investors. This guide explains gross vs net yield, key costs, and local market examples with clear steps and tools to help you run accurate NZ property calculations.
Quick Definitions:
Gross rental yield = Annual rent ÷ Property value × 100. This is your fast screening calculation.
Net rental yield = (Annual rent − Annual expenses) ÷ Property value × 100. This is the more realistic comparison. Typical NZ expenses include rates, insurance, maintenance, property management, body corp fees, accounting, and a vacancy allowance.
What is rental yield?
Rental yield is the annual return from your property expressed as a percentage of its value. It’s a simple but powerful metric that tells you how efficiently your investment produces income. In plain terms, it answers: “For every dollar my property is worth, how much rent am I earning?”
Investors use rental yield to compare suburbs, property types, or purchase opportunities and to check how well a property performs as an investment.
There are three main ways rental yield is measured in New Zealand:
Localised Yield Examples
Step by step: calculate your yield (NZ example)
If you are asking how do you calculate rental yield, follow these New Zealand steps using verified local data.
1) Find a realistic weekly rent
Use the Tenancy Services Market Rent tool to check current medians by suburb and bedroom count. Multiply the figure by 52 weeks for annual rent.
2) Calculate gross rental yield
Formula: Annual rent ÷ property value × 100.
Example: $650 per week × 52 = $33,800. On a $750,000 property this equals 4.5% gross yield.
3) Estimate annual expenses
Include rates, insurance, maintenance, body corp (if any), property management (in Auckland, this is often 6 to 10 percent of rent plus placement or inspection fees), and vacancy.
4) Calculate net rental yield
Formula: (Annual rent − annual expenses) ÷ property value × 100.
Worked example:
Annual rent = $33,800
Annual expenses = $7,500
Net income = $26,300
Net yield = 26,300 ÷ 750,000 × 100 = 3.5% net.
5) Add a vacancy allowance
Many NZ managers plan for a 2 to 6 week vacancy per year. That is why some calculations use 50 weeks instead of 52.
What is a good rental yield in NZ today?
Recent analysis places the median gross rental yield at around 4.5 percent. At the 25th percentile, it is closer to 3.7 percent, and at the 75th percentile, it is 5.3 percent or higher.
For example, some Auckland new-build townhouses often show 4 to 5 percent gross, compared to houses that may sit closer to 3 to 3.6 percent.
Localised examples
Auckland: Average rent in 2025 is about $632 per week which equals $32,864 per year. On an $800,000 property, this is 4.1 percent gross.
Avondale (Auckland): Median rent is $650 per week which equals $33,800 per year. On a $750,000 property, this is 4.5 percent gross.
Net yield costs to include in NZ
Here are the key costs to include in New Zealand when calculating net rental yield:
Rates, insurance, body corp or levies
Maintenance (higher for older homes)
Accounting and compliance costs, including Healthy Homes standards
Gross vs net vs cash yield
When you ask how do you calculate rental yield, it is important to know the differences between gross, net, and cash yield. Each tells you something slightly different about your property’s performance.
Gross yield
Gross yield is the simplest way to measure rental return. It looks only at rent versus property value, making it useful as a quick screening metric before digging deeper.
Gross Yield = Fast comparison tool, but ignores ownership costs.
Net yield
Net yield accounts for real costs such as rates, insurance, and property management. It provides a more accurate comparison between suburbs or property types and is often used by serious investors.
Net Yield = Best for comparing properties accurately.
Cash yield
Cash yield, sometimes called coverage, shows actual cash flow after factoring in mortgage payments. It is commonly included in NZ calculators to help investors judge affordability and cash position.
Cash Yield = Reveals true affordability and sustainability.
Common mistakes in NZ
Using asking rents instead of achieved rents. Always check Tenancy Services medians.
Ignoring vacancy. Even a short gap can reduce returns,
Forgetting management and letting fees.
Comparing different property types unfairly. Townhouses and houses have different yield profiles.
Quick rental yield formulas and next steps
Gross yield = (Weekly rent × 52) ÷ property value × 100
Net yield = (Annual rent − annual expenses) ÷ property value × 100
If you need a ready-to-use worksheet, Staircase can provide a simple NZ calculator with a 50 vs 52 week toggle, Auckland management fee presets, and fields for rates and insurance.
Want help working out your rental yield or building a property plan? Talk to the Staircase team and get personalised guidance from experienced New Zealand advisers.
Frequently asked questions
Is 5 percent a good rental yield in New Zealand?
Yes, it is considered competitive. The median gross is about 4.5 percent.
Should I use 50 or 52 weeks in the formula?
Use 52 for full occupancy. Many NZ managers also calculate with 50 to account for vacancy.
Where do I get current rent numbers?
Use the Tenancy Services Market Rent tool.
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