Rental yield in Malaysia: what a good return looks like
Rental yields vary far more than most buyers expect. In the National Property Information Centre's (NAPIC) Property Market Report for the first half of 2026, average rental yields for apartments and condominiums in the Central Region (Selangor, Kuala Lumpur and Putrajaya) ranged from 1.3% to 10.8%. That spread is why one headline number tells you little about the unit in front of you.
Rental yield in Malaysia is simple to calculate once you know which figures to use. The hard part is being honest about the costs, the empty months and the tax.
This guide explains gross and net yield with formulas, the costs to deduct, a worked example, what moves yield up or down, how rental income and real property gains tax (RPGT) are taxed, and how to run your own numbers.
Quick answer: Gross rental yield is annual rent divided by the purchase price. Net yield takes off running costs and empty months first, so it is always lower. There is no official "good" yield: NAPIC reported Central Region condo yields of 1.3% to 10.8% in H1 2026. Compare your own net yield with your borrowing cost, and check the tax before you buy.
Gross vs net rental yield, with the formulas
Rental yield is the rent a property earns in a year, shown as a percentage of what it cost. It lets you compare a RM600k condo with a RM1.2m one on the same scale. There are two versions, and listings and sales brochures usually quote the higher one.
Gross rental yield uses the rent before any costs:
Gross yield = (monthly rent × 12) ÷ purchase price × 100
Net rental yield takes off the yearly running costs and the rent you lose while the unit is empty:
Net yield = (yearly rent received − yearly running costs) ÷ purchase price × 100
Gross yield is useful for a quick first filter across many projects. Net yield is closer to what reaches your bank account before loan repayments and tax. Some investors go one step further and divide by the total cash they put in (downpayment, stamp duty, legal fees, furnishing) instead of the price. That figure is often called the cash-on-cash return, and it shows the effect of the loan.
| Measure | What goes on top | What goes underneath | Best for |
|---|---|---|---|
| Gross yield | Full year's rent | Purchase price | Quick comparison of many units |
| Net yield | Rent received minus running costs | Purchase price | Realistic return before financing |
| Cash-on-cash return | Rent received minus running costs and loan payments | Cash you put in | Seeing how the loan changes your return |
Whichever version you use, use the same one for every unit you compare. A 5% gross yield and a 3.5% net yield can describe the same property.
Costs to deduct
Net yield is only as good as the cost list behind it. For a condo or serviced apartment, the biggest regular cost is usually the maintenance charge paid to the developer, then to the joint management body (JMB) or management corporation (MC) once one is formed. Strata owners also pay into a sinking fund, which is saved for major repairs such as repainting and lift replacement. Both are governed by the Strata Management Act 2013.
The costs most landlords should allow for:
| Cost | Paid to | How often |
|---|---|---|
| Maintenance charges | Developer, JMB or MC | Monthly |
| Sinking fund | Developer, JMB or MC | Monthly |
| Assessment (cukai taksiran) | Local council | Yearly, usually in two instalments |
| Quit rent (cukai tanah) | State land office | Yearly |
| Fire insurance | Insurer | Yearly |
| Repairs and replacements | Contractors | As needed |
| Empty months between tenants | Lost rent | Each change of tenant |
| Agent's fee to find a tenant | Registered estate agency | Each new tenancy |
| Loan interest | Your bank | Monthly (counted in cash flow, not in net yield above) |
Get the real figures before you book. The developer's sales gallery should be able to tell you the maintenance charge and sinking fund rate per square foot, and the local council sets the assessment. For a new launch, also remember that no rent comes in during construction. With a progressive-payment loan, you usually start paying interest on the amounts the bank has released well before vacant possession (VP), when you get the keys.
Worked example: from gross to net
Here is how that works on one unit. The figures are round assumptions, so swap in the real rent, charges and price for any unit you look at.
Example: Say you buy a condo for RM600,000 and let it at RM2,200 a month. Yearly rent: RM2,200 × 12 = RM26,400. Gross yield: RM26,400 ÷ RM600,000 × 100 = 4.4%.
Now take off the yearly costs.
| Cost (assumed) | Per year |
|---|---|
| Maintenance charges at RM300 a month | RM3,600 |
| One month empty between tenants | RM2,200 |
| Repairs | RM800 |
| Assessment | RM600 |
| Sinking fund at RM30 a month | RM360 |
| Fire insurance | RM300 |
| Quit rent | RM100 |
| Total costs | RM7,960 |
Net rent: RM26,400 − RM7,960 = RM18,440. Net yield: RM18,440 ÷ RM600,000 × 100 = 3.07%, or about 3.1%.
In this example, costs take 1.3 percentage points off the headline yield. Maintenance charges are the biggest single item, and one empty month costs more than a year of repairs, assessment and insurance combined. A second empty month would bring the net yield down to about 2.7% (RM16,240 ÷ RM600,000).
The example leaves out loan repayments, the agent's fee for finding a tenant, and income tax. Each of those reduces what you keep. If you finance the purchase, your monthly cash flow is rent received minus costs minus the instalment, and it can be negative even when net yield looks positive.
What a good rental yield looks like in Malaysia
There is no official benchmark for a "good" rental yield. The official data does show how wide the range is. NAPIC's H1 2026 report put the average rental yield for double-storey terraces in the Central Region at 1.7% to 8.3%, and for apartments and condominiums at 1.3% to 10.8%. These are averages across many schemes, and NAPIC does not say whether they are gross or net, so read them as a guide to the spread.
A more useful test is to compare your net yield with a few reference points:
- Your borrowing cost. If you take a home loan, compare your net yield with the loan's interest rate. Bank Negara Malaysia kept the Overnight Policy Rate (OPR) at 2.75% on 3 Sep 2026; banks price their home loans above it, so ask your bank for your actual rate.
- The range for similar homes nearby. A yield well below NAPIC's range for the same type of home is worth questioning. One well above it may rely on a rent that is hard to sustain.
- Your own aim. Some buyers want rent to cover the instalment. Others accept a lower yield because they plan to live in the unit later. Only you can weigh that.
Yield is also only one part of the return; any change in the property's value matters too. NAPIC's Malaysian House Price Index rose 0.9% year on year to 234.7 points in H1 2026, but that is a national average of past prices, not a forecast for any project.
What affects rental yield: location, unit size and supply
Yield is a ratio, so anything that pushes rent up or the price down raises it, and the reverse lowers it. Three things matter most for new launches.
Location
Rent follows demand from tenants: jobs, rail lines, universities and hospitals nearby. Prices follow demand from buyers, which is not always the same thing. NAPIC reported the average house price in Kuala Lumpur at RM825,282 in Q2 2026, the highest in the country, against RM561,187 in Selangor. A higher price needs a higher rent just to match the same yield, so a well-known address can still produce a modest yield.
Unit size and layout
Smaller units cost less to buy, but their rent does not always fall in step. That is why compact units can show a higher gross yield than large ones in the same building. Check what tenants in the area actually rent: a layout that suits a working couple or sharers may let faster than a large family unit. Maintenance charges are usually set per square foot, so a bigger unit also carries a bigger fixed cost.
Supply nearby
New supply competes for the same tenants. NAPIC counted 33,094 completed homes left unsold in H1 2026, worth RM17.78bn, up from 30,471 in H2 2025. Condominiums and apartments made up 42.8% (14,160 units) of them. In the Central Region, NAPIC lists 81,437 units of incoming supply in Selangor and 27,554 in Kuala Lumpur.
| Supply measure (NAPIC, H1 2026) | Figure |
|---|---|
| Unsold completed homes, Malaysia | 33,094 units (RM17.78bn) |
| Unsold completed homes, H2 2025 | 30,471 units |
| Share that are condos and apartments | 42.8% (14,160 units) |
| Incoming supply, Selangor | 81,437 units |
| Incoming supply, Kuala Lumpur | 27,554 units |
Source: NAPIC Property Market Report H1 2026 (as of 10 Sep 2026)
Many similar units completing in the same area at the same time can mean more empty months and less room to raise rent. Before you book, look at what else is being built within reach of the same tenants and when it is due.
Tax on rental income, and RPGT if you sell
Tax is where many yield calculations stop too early. The Inland Revenue Board of Malaysia (LHDN) sets out how letting income is taxed in Public Ruling No. 12/2018, Income from Letting of Real Property, issued on 19 Dec 2018 (summarised by the Chartered Tax Institute of Malaysia). Most individuals who let out a condo without running a full service business are taxed under paragraph 4(d) of the Income Tax Act 1967, as a non-business rental source.
Rental income
Under that ruling, you can deduct direct expenses incurred wholly and exclusively to earn the rent. The ruling's examples include assessment and quit rent, interest on the loan used to buy the property, fire insurance, rent collection costs, the cost of renewing a tenancy or changing tenant, and ordinary repairs that keep the property in its existing state. Costs to find your first tenant, costs before the property is first let and, generally, costs while it sits empty are not deductible. What remains is added to your other income and taxed at your normal income tax rate.
So a property's after-tax yield depends on your own tax bracket. Two owners of identical units can keep different amounts. LHDN, or a tax agent, can confirm how your rental income is treated.
RPGT when you sell
If you sell at a gain, real property gains tax applies to the chargeable gain, and the rate depends on who you are and how long you held the property. These are the RPGT rates published by LHDN for disposals from 1 Jan 2022 (Malaysian citizens and permanent residents) and from 1 Jan 2019 (companies and foreigners):
| Disposal | Malaysian citizens and PRs | Companies incorporated in Malaysia | Non-citizens |
|---|---|---|---|
| Within 3 years | 30% | 30% | 30% |
| In the 4th year | 20% | 20% | 30% |
| In the 5th year | 15% | 15% | 30% |
| 6th year onwards | 0% | 10% | 10% |
Source: LHDN, Real Property Gains Tax (RPGT) Rates (as of 23 Jun 2026)
LHDN also offers some exemptions, including one for a private residence that an individual can use once. The conditions decide what you actually pay, so check them with LHDN or your lawyer before you plan a sale.
The rental yield calculator
Working through the formulas by hand is useful once. After that, a calculator saves time when you compare several units. PropLaunch's rental yield calculator works out gross and net yield and cash flow from the price, rent and costs you enter.
To get a useful answer, enter figures you have checked:
- Price: the price in the sale and purchase agreement (SPA), after any rebates.
- Rent: what similar units nearby actually let for, not the developer's projection.
- Running costs: maintenance charges, sinking fund, assessment, quit rent and insurance for that unit.
- Empty months: at least one per change of tenant is a common allowance.
- Loan: your bank's rate and tenure, if you want to see monthly cash flow.
Run the numbers more than once: with the rent you hope for, and with a lower rent and an extra empty month. The gap between the two shows you how much room for error the purchase has.
Frequently asked questions
What is a good rental yield in Malaysia?
There is no official figure. NAPIC reported average yields of 1.3% to 10.8% for apartments and condominiums in the Central Region in H1 2026, so the range is wide. A practical check is to compare your net yield with your loan's interest rate and with similar homes nearby.
Is rental yield calculated on gross or net rent?
Both versions are used. Gross yield uses the full year's rent; net yield takes off running costs and empty months first. Brochures and listings usually quote gross yield, so ask which one you are looking at.
Do I pay tax on rental income in Malaysia?
Yes. Under LHDN Public Ruling No. 12/2018, rental income is taxed after deducting allowable direct expenses such as assessment, quit rent, loan interest, fire insurance and ordinary repairs. The balance is added to your other income and taxed at your normal rate.
Can I deduct my loan interest from rental income?
Interest on a loan taken to buy the property you let is listed as a deductible expense in the ruling. Only the interest counts, not the principal you repay, and deductions can be restricted in some cases. Confirm your figures with LHDN or a tax agent.
How much RPGT do I pay if I sell my property after 5 years?
For Malaysian citizens and permanent residents, LHDN's rate for disposals from 1 Jan 2022 is 15% in the 5th year and 0% from the 6th year onwards. Companies pay 10% and non-citizens 10% from the 6th year. The tax is charged on the chargeable gain, not on the sale price.
Do new launches have higher rental yields than subsale homes?
Not by default. A new launch may command a higher rent, but it often has a higher price per square foot, and it earns no rent until vacant possession. Compare the net yield of each unit on its own figures.
Why is my actual yield lower than the developer's projection?
Projections often use gross rent, assume no empty months and leave out maintenance charges and tax. Recalculate with checked rents, the actual charges per square foot and at least one empty month.
Before you book
Before you commit to a unit as an investment, check the rent for similar homes nearby, get the maintenance charge and sinking fund rate in writing, and look at what supply is coming up in the same area. Then work out net yield and monthly cash flow with your own numbers, and confirm the tax position with LHDN or a tax agent. Your bank can tell you what loan you qualify for, and a lawyer can explain the SPA.
This guide is general information, not financial, legal or tax advice. Rules and rates change; confirm the figures that apply to you with your bank, your lawyer or LHDN before you commit. PropLaunch is not a real estate agency.
