Rental Yields fall
Changes to lenders buy to let criteria
16 October 2006: The latest rental yield figures released by Landlord Mortgages, the UK’s largest specialist buy-to-let broker, show that rental yields in Q3 2006 have continued to fall across England (5.69% to 5.54%) and the Greater London area (5.70% to 5.53%). However, the average decline in yields has shown signs of slowing heralding a stabilising market.
Chart one – Rental yield figures for buy-to-let properties (new and remortgage)
Scotland – Yields Still Falling!
Scotland, although still outperforming England and London, has shown a sharp decline in rental yields over the quarter. This can be attributed to average house prices in this region increasing, a factor that is gradually driving down the traditionally higher rental yields obtainable north of the border.
Overall, yields available across Scotland, England and London are moving closer together suggesting that these three market places are becoming increasingly linked. This is likely to lead to a situation in the future whereby above average rental yields will be found in smaller specific areas (i.e. Bath and South East Avon) rather than huge regions (i.e. Scotland or the South West)
Lee Grandin, Managing Director, Landlord Mortgages, comments:
“While the rental yields available in Greater London, England and Scotland have fallen quarter on quarter, this is not necessarily a sign of difficulties in the market. Rather, it can be attributed to continued house price increases and lenders relaxing their minimum rental coverage requirements. These changes have been a bonus for many property investors as it allows them to purchase properties that they had been forced to ignore in the past.
“Scotland’s yields have taken a sharper downturn over the last quarter. However this should not be seen as a signal to pull out of the market. It is an indication that traditionally lower Scottish house prices are starting to catch up with those in England and a sign that investors need to start looking for profitable areas rather than regions.
“It is important that potential residential property investors are not put off by this news as there are still good opportunities for profit in this market. After all if the lenders are confident of the future of buy-to-let, why shouldn’t we be?”
Investors interested in speaking to Landlord Mortgages can contact them on 0800 917 3324 or via
www.lml.co.uk
Buy To Let Research:
The research detailed above was compiled using data from the Landlord Mortgages database, which contains records of over 20,000 landlords.
Rental Yields (COMBINED) |
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2004 |
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2005 |
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2006 |
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Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
Q4 |
Q1 |
Q2 |
Q3 |
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England (inc London) |
6.37 |
6.32 |
6.11 |
5.99 |
6.22 |
6.03 |
6.08 |
5.97 |
5.87 |
6.15 |
5.91 |
5.69 |
5.54 |
London |
6.12 |
6.09 |
5.96 |
5.93 |
6.09 |
5.96 |
6.08 |
5.99 |
5.82 |
6.58 |
6.07 |
5.70 |
5.53 |
Scotland |
7.77 |
7.11 |
7.27 |
8.02 |
6.92 |
6.88 |
7.37 |
6.47 |
6.77 |
6.27 |
6.58 |
6.48 |
5.91 |
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