BTL rental yields increase for South East

Ramesh Sharma

June 1, 2004

Despite overall rental incomes declining for September in line with a drop in the average house price, landlord rental yields for the South East and Greater London have risen by 0.8 and 0.1 per cent respectively. South East’s landlord yield currently stands at 6.4 per cent.

John Heron, managing director of Paragon, said this upturn in rental yields corresponds with the high property prices for the areas. “Due to sustained demand rental incomes have risen more rapidly than property values in some areas which has in turn had a positive impact on rental yields.”

Results from the study also revealed that average landlord rental yields remain at 6.5 per cent. However, over the past 12 months landlords in Greater London have seen rental incomes rise by 18.6 per cent, in line with property values for this region increasing by over 20 per cent.

Despite rental incomes generally declining across the country, Yorkshire and Wales remain property hotspots for BTL investors with rental incomes and property values both appealing to potential buyers.

An investor who purchased a property 12 months ago in Yorkshire would be looking at a current return of 38.1 per cent with average total returns across the country reported at 16.7 per cent.

Only the East Midlands recorded a fall in total gross and initial investment return, down 7.28 per cent from September 2004 to September 2005.

Heron concluded the rental market was likely to further improve in the future. “The overall trend is still upwards over the longer-term. The average rent has risen from £9,606 in September 2004 to £10,386 in September 2005 – an increase of 8 per cent,” he said.

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