Buying to let: what yield rankings do not tell you

A gross rental yield is annual rent divided by purchase price. The trouble is that this ratio rises for two opposite reasons: a rent that holds up, or a price that is collapsing. Nothing in the figure distinguishes them.

This is not an objection of principle. It is measurable, and here is the measurement.

The counter-ranking, across 22,652 towns

Icioola computes the gross yield wherever both rent and sale price are known, then confronts it with four signals of a market that is not holding. The share of such towns at the top of the raw yield ranking leaves little room for doubt:

• the 50 highest yields in France: 100% are towns our signals rule out;
• the top 100: 96%;
• the top 200: 94%.

The traps yield more. That is the whole problem.

The instinct would be to assume a cautious investor gives up a little yield. The measurement says the opposite: the ruled-out towns average 7.5% against 5.9% for the others — a quarter more. A gap running that way cannot be corrected by sorting differently; it can only be corrected by refusing to sort on yield alone.

Four signals, and two ways of missing

• Falling population — 10,368 towns. By far the most frequent motive. A home is let to somebody; where there are fewer people each year, future demand is the real risk, not the entry price.
• Vacancy not published — 9,263 towns. Statistical confidentiality masks vacancy in small towns — precisely those crowding the top of the yield ranking. An unknown is a reason for caution, not a clean bill of health.
• High vacancy — 3,257 towns above 10% of empty private homes.
• Degraded stock — 1,985 towns where more than 33% of homes are rated F or G. These are progressively leaving the rental market: the advertised yield applies to a property that will no longer be lettable.

What this page does not say

Whether an investment is good. The real net yield depends on the tax regime, on works, on management and on your own situation. This page ranks nothing for you; it removes what a gross yield hides.

The actual property tax. The rate voted by the town is public; the cadastral base on which it applies is not. We therefore publish the rate and say what is missing, rather than multiplying by an invented base.

Nothing in Alsace-Moselle. Moselle, Bas-Rhin and Haut-Rhin fall under local law: property sales are not recorded in the national DVF database. No purchase price means no yield — a hole in our data, and one worth naming.

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