Rental Yield in Malaysia: Gross vs Net, and What Landlords Actually Keep
Rental yield Malaysia buyers quote is almost always gross: annual rent divided by purchase price, times 100. Net yield is (annual rent minus annual operating costs) divided by purchase price. The gap is not small. GlobalPropertyGuide’s Q1 2026 survey puts gross yields at 5.31% in Johor Bahru and 4.86% in Kuala Lumpur, and notes in the same breath that all its yields are gross and that net yields are “typically around 1.5% to 2% lower”. This guide works two full examples, subtracting every cost in turn — maintenance charge and sinking fund, assessment, quit rent, fire insurance, letting commission, repairs, vacancy and income tax — and then shows where the loan instalment belongs.
Short answer
Gross rental yield is annual rent divided by purchase price times 100. Net rental yield is annual rent minus annual operating costs, divided by purchase price. Operating costs include the maintenance charge, sinking fund, assessment tax, quit rent, fire insurance, letting commission, repairs and vacancy. A RM500,000 Johor Bahru condo let at RM2,200 a month is 5.28% gross and about 3.18% net. The loan instalment belongs in cash-on-cash, not in net yield.
Key numbers at a glance
| Gross yield formula | Annual rent ÷ purchase price × 100 |
|---|---|
| Net yield formula | (Annual rent − operating costs) ÷ purchase price × 100 |
| Gross-to-net gap | Typically 1.5–2 points lower (GlobalPropertyGuide) |
| Malaysia gross yield, Q1 2026 | 5.27%; Johor Bahru 5.31%; Kuala Lumpur 4.86% |
| Sinking fund | 10% of the maintenance charge, on top (SMA 2013) |
| Commission not deductible | Commission for the first tenant (PR 12/2018 para 8.3) |
| Tax on rent | Residents 0%–30% progressive; non-residents flat 30% |
| NAPIC | Publishes no residential rental yield series |
Key points in 30 seconds
- Gross yield = annual rent ÷ purchase price. Net yield = (annual rent − annual operating costs) ÷ purchase price. When someone quotes 6%, ask which one they mean.
- GlobalPropertyGuide’s Q1 2026 survey: Malaysia average 5.27% gross, Iskandar Puteri 5.78%, Johor Bahru 5.31%, Kuala Lumpur 4.86% — and it states net yields typically run 1.5 to 2 points lower.
- Costs that must come out: maintenance charge and sinking fund, assessment tax (cukai taksiran), quit rent or parcel rent (cukai tanah / cukai petak), fire insurance, letting commission, repairs, vacancy, then income tax on the rent.
- Worked example: a RM500,000 Johor Bahru condo at RM2,200 a month is 5.28% gross and about 3.18% net. A RM800,000 KL condo at RM3,200 is 4.80% gross and about 2.80% net.
- The loan instalment does not belong in net yield — it belongs in cash-on-cash. At a 90% margin and an illustrative 4.00% over 35 years, the Johor Bahru unit runs about RM667 a month negative.
- NAPIC publishes no residential rental yield series, so any figure attributed to NAPIC is not NAPIC’s.
How do you calculate rental yield? Two formulas and one choice people skip
The formulas are easy. The hard parts are what goes in the denominator and what comes out of the numerator.
GlobalPropertyGuide’s published method is “(Median Monthly Rent × 12) ÷ Median Purchase Price × 100”.
Net yield = (annual rent − annual operating costs) ÷ purchase price × 100
Purchase price, or total acquisition cost?
This is the choice most calculations skip. What leaves your account is not just the price: there is transfer stamp duty, legal fees, loan stamp duty and disbursements on top. Either denominator is defensible — but say which one you used, or two people’s numbers cannot be compared. Both examples below are worked twice: once on price, so it can be set against published market data, and once on total acquisition cost, which is closer to your real return. For the full upfront cost list see how much cash you need to buy and stamp duty and legal fees.
And a third number: cash-on-cash
If you borrowed, net yield will not tell you whether you are up or down each month. That is cash-on-cash: (net operating income − annual loan repayments) ÷ the cash you actually put in. Keep the three numbers separate; there is a section on this below.
Which costs must come out before you get to net yield?
The table separates two things people routinely merge: whether a cost comes out of your cash, and whether it is deductible for tax. The tax column follows the Inland Revenue Board’s Public Ruling No. 12/2018, Income from Letting of Real Property, issued 19 December 2018.
| Item | Deduct for net yield? | Deductible for tax (PR 12/2018)? |
|---|---|---|
| Service / maintenance charge | Yes | Not confirmed. The para 8.2 deductible list I retrieved does not name service charges, so I will not assert it. Treat it as a cash cost and ask your tax agent |
| Sinking fund | Yes. Under the Strata Management Act 2013 and the 2015 Regulations it is 10% of the maintenance charge, charged on top | As above, not confirmed |
| Assessment tax (cukai taksiran) | Yes. Billed by the local council in two halves; in Johor Bahru that is MBJB | Yes: “annual assessment paid to the local authority” |
| Quit rent / parcel rent (cukai tanah / cukai petak) | Yes | Yes: “quit rent paid to the land office” |
| Fire insurance | Yes for landed. For strata the whole building is insured by the JMB or MC and the premium sits inside the maintenance charge | Yes: the fire insurance premium on the property |
| Letting agent commission | Yes | Depends. Para 8.3 expressly treats commission for obtaining the first tenant as a non-deductible initial expense. Commission to renew or replace a tenant is deductible |
| Repairs | Yes | Yes for “ordinary repairs to maintain the real property in its existing state”. Improvements are not repairs |
| Vacancy | Yes. It is not a bill, it is rent you do not collect — and it is the most commonly omitted item | Not applicable |
| Loan interest | No — it belongs in cash flow, not in net yield | Yes: interest on a loan taken to finance the purchase of property that is rented out. Interest only; the principal portion of the instalment is not deductible |
| Income tax on the rent | Yes, out of net cash | — |
What the tax costs you
Tax residents pay progressive rates from 0% to 30%, with the top 30% band applying to chargeable income above RM2 million (PwC Worldwide Tax Summaries, reviewed 16 June 2026). Non-residents pay a flat 30% on gross rent less allowable expenses.
Two related points. On tenancy stamp duty: the RM2,400 annual-rent exemption was removed on 1 January 2025 (Finance Act 2024, Item 49), and tenancies moved to self-assessment on 1 January 2026. It is usually the tenant’s cost, but read the tenancy – see renting out property: tenancy stamp duty and rental income tax. And on service tax: residential lettings are excluded; rental and leasing of commercial space is taxable, at 6% from 1 January 2026 above a RM1 million annual threshold.
Priced off an asking rent of RM2,500, that RM500,000 Johor Bahru unit looks like 6.00%. Let at RM2,200 it is 5.28% gross and about 3.18% net once costs come out. Finance it at a 90% margin and the monthly cash flow is roughly −RM667, or RM8,002 a year out of your salary. The error is not in the arithmetic — it is in the number you started with.
Ask Louis directly
Send me the maintenance rate, the assessment bill and the rents recently signed in that block, and I will work out the net yield and the monthly cash flow with you.
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Worked example 1: a Johor Bahru condo, 5.28% gross to 3.18% net
| Line | Amount | Note |
|---|---|---|
| Annual rent, fully let | RM26,400 | RM2,200 × 12 |
| Gross yield | 5.28% | RM26,400 ÷ RM500,000, against GlobalPropertyGuide’s 5.31% for Johor Bahru in Q1 2026 |
| Less one month vacancy (assumed) | −RM2,200 | Effective rent collected: RM24,200 |
| Less maintenance at RM280/month (assumed) | −RM3,360 | |
| Less sinking fund (10% of maintenance) | −RM336 | RM28 a month |
| Less assessment tax (assumed) | −RM600 | MBJB bills in two halves each year |
| Less quit rent / parcel rent (assumed) | −RM120 | |
| Less fire insurance | RM0 | The building is insured by the JMB or MC; the premium is inside the maintenance charge |
| Less letting commission, 1 month + 8% SST | −RM2,376 | The usual scale for a one-year tenancy; halve it if the tenant stays two years |
| Less repairs and replacements (assumed) | −RM1,500 | Air-conditioning, water heater, paint, wear on furnishings |
| Net operating income (before tax, before loan) | RM15,908 | RM24,200 − RM8,292 |
| Net yield on purchase price | 3.18% | RM15,908 ÷ RM500,000 |
| Net yield on total acquisition cost | 3.03% | Total acquisition cost RM525,575, built up below |
How the acquisition cost is built up
- Transfer (MOT) stamp duty on RM500,000 at 1% then 2% = RM9,000. Note that one condition of the first-home exemption is that the property is bought solely to be used as a dwelling house, so an investment unit will not normally qualify — do not budget for it.
- SPA legal fees under SRO 2023, 1.25% on the first RM500,000, plus 8% SST = RM6,750
- Loan agreement stamp duty, 0.5% of RM450,000 = RM2,250
- Loan documentation legal fees, 1.25% of RM450,000 plus 8% SST = RM6,075
- Disbursements — searches, stamping, courier (assumed) = RM1,500
- Additional costs RM25,575; total acquisition cost RM525,575
The conclusion is blunt: a unit advertised at 5.28% returns about 3% net. That is consistent with GlobalPropertyGuide’s own caveat that net yields run 1.5 to 2 points below gross — here the gap is 2.1 points.
Worked example 2: a Kuala Lumpur condo, 4.80% gross to 2.80% net
The same method on a higher-priced Kuala Lumpur unit. Maintenance is dearer per square foot and assessment is higher, while the rent is not proportionally higher, so the net falls further. Every figure marked (assumed) below is a placeholder, not published data. Maintenance charges, assessment, quit rent and repair budgets vary building by building, so replace them with your own bills. The price, rent and the 4.00% over 35 years are illustrations, not a bank quote.
| Line | Amount |
|---|---|
| Annual rent, fully let | RM38,400 |
| Gross yield | 4.80% (against GlobalPropertyGuide’s 4.86% for Kuala Lumpur in Q1 2026) |
| Less one month vacancy (assumed) | −RM3,200 (effective rent RM35,200) |
| Less maintenance at RM440/month (assumed) | −RM5,280 |
| Less sinking fund (10%) | −RM528 |
| Less assessment tax (assumed) | −RM1,200 |
| Less parcel rent (assumed) | −RM300 |
| Less letting commission, 1 month + 8% SST | −RM3,456 |
| Less repairs and replacements (assumed) | −RM2,000 |
| Net operating income | RM22,436 |
| Net yield on purchase price | 2.80% |
| Net yield on total acquisition cost | 2.66% (additional costs RM42,716) |
Where the loan instalment fits: yield versus cash-on-cash return
The most common error in this whole calculation is subtracting the loan instalment inside net yield. Do not. Net yield measures what the property itself earns, independent of how you paid for it. How much you borrowed, and for how long, belongs to a different measure.
| Measure | How it is calculated | JB example | What it answers |
|---|---|---|---|
| Gross yield | Annual rent ÷ purchase price | 5.28% | Is the rent high relative to the price? |
| Net yield | Net operating income ÷ purchase price | 3.18% | What does the property itself earn after holding costs? |
| Cash-on-cash | (Net operating income − annual repayments) ÷ cash invested | −10.6% | Am I up or down each year? |
At a 90% margin, about RM667 a month out of pocket
A RM450,000 loan at an illustrative 4.00% over 35 years is about RM1,992 a month, or RM23,910 a year. Net operating income of RM15,908 less that is −RM8,002 a year, about −RM667 a month. Cash invested is the RM50,000 deposit plus RM25,575 of acquisition costs, so RM75,575 — a cash-on-cash return of roughly −10.6%.
That figure alone overstates the damage. About RM6,019 of the first year’s repayments is principal, which is you repaying yourself, not an expense. Add it back and the first-year shortfall is about −RM1,982, roughly RM165 a month — before any capital growth, which this article does not forecast.
What a 70% margin, or cash, does to it
| Scenario | Annual repayments | Annual cash flow | Cash-on-cash |
|---|---|---|---|
| 90% margin (RM450,000) | RM23,910 | −RM8,002 | −10.6% |
| 70% margin (RM350,000) | RM18,597 | −RM2,689 | −1.5% |
| Cash purchase | RM0 | +RM15,908 | 3.03% (on total acquisition cost) |
70% is not an arbitrary figure: Bank Negara caps loan-to-value at 70% on an individual’s third and subsequent outstanding housing facility. See how the 70% margin rule works, and OPR, SBR and how home loan rates are set for where a real rate comes from.
A side effect: you may owe no tax on the rent in year one
In the Johor Bahru example, first-year loan interest is about RM17,890. Once that is added to the deductible costs — assessment, quit rent, repairs, renewal commission — taxable rental income is about RM1,714. In the Kuala Lumpur example it is negative, about −RM381, meaning no taxable rental income at all in year one. That is leverage doing its thing, and it is worth saying out loud: a good tax outcome is not the same as a good cash outcome.
Want to see what you can actually buy?
The rules are above; these are the actual homes. Each page lists the projects I am tracking, with published price ranges and the date each figure was checked. Tell me the area on WhatsApp and I will send the current list.
Rental yield Malaysia benchmarks: what published data actually says
There is not much citable public data. I use two sources, and state the limits of each.
1. GlobalPropertyGuide, survey Q1 2026 (last updated March 2026)
Its method is published: a twice-yearly survey of one-, two- and three-bedroom units in the largest cities, using asking rents and listing prices from “a leading local property platform”.
| Area | Gross yield |
|---|---|
| Malaysia average | 5.27% (Q3 2025: 5.19%) |
| Subang Jaya | 6.29% |
| Iskandar Puteri | 5.78% |
| Ipoh | 5.46% |
| Petaling Jaya | 5.43% |
| Johor Bahru | 5.31% |
| Shah Alam | 5.29% |
| Kuala Lumpur | 4.86% |
| George Town | 3.74% |
Read its caveat alongside the table: “All yields are gross — i.e. before taxes, repair costs, ground rents, estate agents’ fees, and any other costs. Net yields … are typically around 1.5% to 2% lower.” And because it is asking-rent and listing-price data rather than transactions, it reads high. Use it as a reference line, not as a forecast for your unit.
2. PropertyGuru Malaysia (updated 25 June 2026)
It gives a national gross average of 5.19% (Q3 2025) and ranges by type: Johor Bahru condos and serviced apartments 6%–7% and JB landed 4%–5.5%; KL mid-market apartments 5%–6.5% and KL premium 2%–4%; Penang mid-rise condos 5%–6%. It puts net yield 2 to 4 points below gross. The article names no data source for those ranges, and its national figure is a quarter behind GlobalPropertyGuide’s, so I treat it as a portal estimate for cross-checking, never as the headline number.
For transacted and asking prices in the area you are targeting, see property valuation and where to check transacted prices and the published price ranges.
Five mistakes that make a rental yield look better than it is
- Using the asking rent instead of the achieved rent. The same Johor Bahru unit advertised at RM2,500 shows 6.00%; let at RM2,200 it is 5.28%. GlobalPropertyGuide’s data is itself asking-rent data, and the example a seller or agent hands you usually is too. Ask what tenancies in that block have actually been signed at recently.
- Forgetting vacancy. One empty month a year is 8.33% of the rent gone. Handover waves in new blocks, the gap between tenants and any repainting all count. I assume one month by default; letting faster than that is a bonus, not a plan.
- Missing the sinking fund and the one-off costs. The sinking fund is a further 10% on top of the maintenance charge. Then there is the letting commission, repainting after a tenant leaves, air-conditioning servicing and the water heater that dies. RM1,500 a year for repairs is not generous.
- Forgetting tax. Rental income is taxable: progressive rates for residents, a flat 30% for non-residents. And commission for obtaining the first tenant is expressly non-deductible under PR 12/2018, which catches a lot of people out.
- Subtracting the loan instalment inside net yield. Net yield measures the property; repayments belong in cash-on-cash. Mixing them means you are measuring two buildings with two different rulers.
If you are buying strata, see how maintenance fees and the sinking fund are calculated; for assessment, quit rent and utility transfers after handover see the after-keys checklist; and for the tax when you eventually sell, selling property and RPGT.
Related questions
How should I account for vacancy in a rental yield calculation?
The simplest and safest approach is to assume one empty month a year, which means multiplying annual rent by 11/12 and giving up 8.33% of it. On a RM2,200 unit that is RM2,200 a year you never collect. Include handover waves in new blocks, the gap between tenants and any repainting time. If the block has heavy supply or fast tenant turnover, assume two months. Vacancy is not a bill, which is exactly why it gets left out, and it often moves the number more than the maintenance fee does.
How much is the maintenance fee, and can it go up?
It is apportioned by share units and varies enormously between blocks — more facilities, higher rate — so there is no general figure to plug in. Ask the management office, the JMB or the MC for the current rate per square foot and the latest accounts. The sinking fund is the one fixed part: 10% of the maintenance charge, charged on top. Charges do get revised, so read the accounts and check whether reserves are healthy. See maintenance fees and the sinking fund.
Can I use the first-home stamp duty exemption on a property I will rent out?
Usually not. One of the conditions is that the property is bought solely to be used as a dwelling house, and the buyer must never have owned any residential property — including one inherited or gifted, held individually or jointly — supported by a statutory declaration. A pure investment unit does not normally fit. Do not budget for it: on a RM500,000 purchase the transfer stamp duty alone is RM9,000. See stamp duty and legal fees.
Is a 3% net rental yield worth it?
Compare it with two numbers: your mortgage rate and the risk-free fixed deposit rate. If net yield is 3% and the loan costs 4%, you are funding a 3% return with 4% money and relying on capital growth to close the gap — and nobody can guarantee capital growth. This site does not forecast prices. Work out the net yield and the monthly cash flow first, then decide whether you are buying rent or buying long-term location value; the selection criteria are not the same.
Frequently asked questions
What is a good rental yield in Malaysia?
There is no official benchmark. The citable reference line is GlobalPropertyGuide’s Q1 2026 survey: 5.27% gross nationally, 5.31% in Johor Bahru and 4.86% in Kuala Lumpur. But those are gross and built from asking rents, and the same source says net yields typically run 1.5 to 2 points lower. Rather than chase a headline percentage, work out the net yield on the specific unit and compare it against fixed deposit rates and your own mortgage rate.
What is the difference between gross and net rental yield?
GlobalPropertyGuide says net runs about 1.5 to 2 percentage points below gross; PropertyGuru puts the gap at 2 to 4 points. In the two worked examples here the gap is 2.1 points in Johor Bahru (5.28% to 3.18%) and 2.0 points in Kuala Lumpur (4.80% to 2.80%). How wide the gap gets depends mostly on the maintenance charge per square foot, your vacancy assumption and how the letting commission is spread.
Should the mortgage payment be deducted when calculating net rental yield?
No. Net yield measures what the property earns regardless of how it was financed; deduct the instalment and you can no longer compare one unit with another. The loan belongs in cash-on-cash return: (net operating income − annual repayments) ÷ cash invested. Note the separate point that loan interest is deductible against rental income for tax while the principal portion is not — but that is a tax calculation, not a yield calculation.
Are maintenance fees and the sinking fund tax deductible against rental income?
Not confirmed, so this guide does not claim it. The deductible list at para 8.2 of LHDN’s Public Ruling 12/2018 names assessment tax, quit rent, loan interest, fire insurance, rent collection costs, tenancy renewal or tenant replacement expenses and ordinary repairs — it does not name service charges or the sinking fund. They must still come out of a net yield calculation because they are real cash. Confirm the tax treatment with LHDN or your tax agent.
How much tax do I pay on rental income in Malaysia?
Tax residents pay progressive rates from 0% to 30%, with the top 30% band applying above RM2 million of chargeable income. Non-residents pay a flat 30%. Both are charged on rent net of allowable expenses. The 50% exemption on residential rent of RM2,000 a month or less applied for YA2018–2020 and was reported as extended to YA2021–2025, but I found nothing extending it to YA2026 in the Budget 2026 documents, so do not budget for it.
Is rental yield higher in Johor Bahru than Kuala Lumpur?
On GlobalPropertyGuide’s Q1 2026 survey, yes: Johor Bahru 5.31% and Iskandar Puteri 5.78% against Kuala Lumpur 4.86%. Those are gross figures from asking-rent data, though. Two practical qualifications: maintenance charges per square foot on higher-end KL stock are usually dearer, which pushes net yield down further; and some Johor Bahru blocks have concentrated supply, so the vacancy assumption should be conservative. Rebuild both with the actual bills for the block you are buying in.
What does a letting agent charge, and is the commission deductible?
The Board of Valuers, Appraisers, Estate Agents and Property Managers (LPPEH) scale caps sale commission at 3% of the price. For letting, one month’s rent on a one-year tenancy is the general practice, plus 8% SST if the firm is SST-registered — I could not verify the exact letting scale from an official source, so ask the agency for it in writing. For tax, commission to obtain the first tenant is not deductible under PR 12/2018, while renewal or replacement commission is.
Sources & verification
- GlobalPropertyGuide — Malaysia gross rental yields (survey Q1 2026, updated March 2026)
- LHDN — Public Ruling No. 12/2018, Income from Letting of Real Property (19 Dec 2018)
- PwC Worldwide Tax Summaries — Malaysia, taxes on personal income
- LHDN — Non-resident individual
- PropertyGuru — Rental Yield Trends in Malaysia 2026 (updated 25 Jun 2026)
- NAPIC / JPPH — latest publications index
- iProperty — Quit rent, assessment and parcel rent explained (updated 12 May 2026)
- MBJB — Assessment tax (cukai taksiran)
- MahWengKwai and Associates — Strata management handover timeline (sinking fund)
- KPMG Malaysia — 6% service tax rate for rental or leasing services
Verified: 2026-09-20. This guide is general information, not legal, tax or financial advice. Rules and rates change — confirm in writing with your lawyer, bank or the relevant authority before you sign.
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Louis Koh
11 years in Malaysian property · Johor Bahru & Kuala Lumpur · English & 中文
I help local buyers and cross-border buyers from Singapore with new and subsale property. Every figure in these guides is sourced; when a rule changes, I update the page and date it.
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Send me your situation — new or subsale, budget, state, and where you are in the process — and I will tell you what to do next and what to watch for.
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Louis Koh · 11 years in Malaysian property · +60 10-906 6685 · replies 9am–10pm MYT