What Gross Yield do landlords want?

[ez8004]

The buy to let tax changes are only a year away. Anyone with 90k would be better off taking the meagre returns the banks are offering rather than invest in buy to let. Don't forget all that gross yield will be taxed as salary and in many cases will push current 20% tax payers into the 40% bracket meaning it will be a very costly mistake. Buy to let is over. Don't be the last fool.

 

This is why you don't have a mortgage on the letted property and also have it in your spouse's name if they don't work so they can use their tax free allowance on income tax

[RWM1967]

The buy to let tax changes are only a year away. Anyone with 90k would be better off taking the meagre returns the banks are offering rather than invest in buy to let. Don't forget all that gross yield will be taxed as salary and in many cases will push current 20% tax payers into the 40% bracket meaning it will be a very costly mistake. Buy to let is over. Don't be the last fool.

 

The proposed tax on mortgage interest is of course currently subject to Judicial Review legal proceedings, so it may be overturned. It also does not apply to landlords without a mortgage, or to landlords who are limited companies.

 

---------- Post added 20-05-2016 at 15:27 ----------

 

It is not the yield that matters, but return on investment i.e. (Annual income-Annual expenses)/(Capital costs).

Annual expenses depend on whether the landlord uses an agent and has a mortgage amongst other things. It's not one-size-fits-all.

Achievable rents are more related to the size of the property than the value. They are not much different for a 3 bed ex council house of non-standard construction and a 3 bed victorian terrace even though the latter costs twice as much to buy. That has a big effect on yield and ROI.

I guess if a landlord could get the same rent guaranteed without some of the costs and some of the work they might be interested.

 

I fully agree, but for some reason property investments always refer to gross yield, rather than the ROI. Leasing a property to a housing association gives a stable and predictable annual income, and also very much reduced annual expenses, so this gives a much higher Return On Investment as compared to letting direct to tenants (who may not pay, or may damage the property, etc, particularly when void periods are also factored in).

[poppet2]

Landlords may indeed set up limited companies, but according to this (last sentence), there may be implications.

 

What about if you buy cash?

 

http://www.thisismoney.co.uk/money/news/article-3396573/How-crafty-landlords-setting-companies-dodge-Osborne-s-tax-snatch.html

[ez8004]

Landlords may indeed set up limited companies, but according to this (last sentence), there may be implications.

 

What about if you buy cash?

 

As stated before, if you don't need a buy to let mortgage, it will not affect you.