How we calculate it
- Gross yield = 12 months’ rent ÷ purchase price.
- Net yield = (rent collected − annual costs) ÷ total investment. The total investment is the price plus buying costs and renovation. Empty months are already deducted from the rent collected.
- Return on your money: if there is a mortgage, we subtract the first year’s interest and divide by what you have put in yourself. This figure tells you whether borrowing helps you or hurts you.
All figures are before income tax. Long-term residential lets get allowances on the tax return that can leave the tax well below your marginal rate.
What is a good rental yield in the Canary Islands
As a guide, a net yield above 4 or 5% is considered reasonable for long-term letting. In the Canary Islands it varies a lot between areas: in the capitals and the tourist south purchase prices are high and yields get squeezed; in mid-altitude municipalities buying is cheaper and yields tend to be better. Check the average purchase and rental price of each area in our directory.
Holiday lets
They can bring in more gross income, but have higher costs (cleaning, platforms, utilities), and in the Canary Islands they are subject to their own regulations and town hall authorisation. Before buying to let by the night, check that the property can be registered as a holiday home.
Frequently asked questions
What is the difference between gross and net yield?
Gross yield simply divides the annual rent by the price. Net yield deducts costs (community fees, IBI, insurance, maintenance, empty months) and divides by everything invested, including buying costs.
Does buying to let with a mortgage pay off?
If the flat’s net yield is higher than the mortgage interest rate, borrowing multiplies what your money earns. If it is lower, it eats into it. Raise the financed share in the calculator and watch how the return on your money changes.
How many empty months should I allow for?
For long-term letting, one month a year is a cautious estimate that covers changes of tenant and small repairs.