The gross rental return is obtained by dividing the annual rental income plus additional costs by the purchase price and multiplying this by 100. The net rental return takes into account operating costs, maintenance reserves, provisions for repairs and administration costs. These reduce the annual rental income. If you have taken out a loan, the loan interest must be deducted from this amount. The result, divided by the purchase price (including the ancillary purchase costs for brokers, notaries, property tax and land registry entry) and multiplied by 100 gives the net rental return.

Example gross rental return:

Annual gross rent: € 7,500

Purchase price: € 200,000

Gross Rental Return: 7,500: 200,000 x 100 = 3.75%

Example net rental return:

Annual gross rent: € 7,500

Additional rental costs: € 1,400

Loan interest: € 500

Purchase price including ancillary purchase costs: € 215,140

Net rental return: (7,500-1,400-500): 215,140 x 100 = 2.6%