Landlords warned of possible fall in rental yields

by Sarah Ashcroft

Landlords in the UK have been advised that rising house prices across the country could have an impact on the rental yields that they can expect to enjoy in the coming months and years.

New research by the Online Letting Agents found that there was a slight fall in yields in the second half of last year, with the average figure dropping from 5.6 per cent to 5.5 per cent. In London, this stood at just 4.8 per cent.

It's in stark contrast to the results for average rental values at the moment, with the typical property in London attracting a monthly fee of £1,417 from the tenant and the figure for the rest of the country standing at £701.

Elaine Carroll, director of the Online Letting Agents, said that yields have fallen as house values have gone up in recent times. This is exactly the opposite of what happened in the aftermath of the UK's financial crisis.

"These figures show that landlords' average yield has remained static, despite rent rises. This is a result of the fact that the average price of a typical buy-to-let property has grown marginally faster than average rents," she stated.

Landlords seeking a particularly high yield should perhaps look towards the north of England in Yorkshire and Humber, as these are the regions where the return is said to be the highest - in both cases the yield is six per cent.

The good news for landlords is that the average monthly rent of £701 is up on the £674 recorded in the second half of 2012, indicating that there is the potential for property owners to record greater income through renting out a home.

Another advantage for many is low mortgage rates, with the number of transactions benefiting as a result. Indeed, there was a 28 per cent rise in new mortgages taken out by landlords in the second half of 2013.ADNFCR-1645-ID-801714103-ADNFCR

Published on: April 22, 2014

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