Rental yields are at record levels in September, defying earlier reports of a potential slump or even a crash, according to Paragon Mortgages’ latest Buy-to-Let Index.
The Index shows rises in rental incomes have reached 3.3% this month, which has combined with rising property values of 3.27% and yields of 0.03% to stabilise the market after two months of falls despite the fact that landlords are now paying 10% more on average for a property than they were three months ago and 20% more than a year ago.
John Heron, managing director of Paragon, said: “This month’s strong increase in rents achieved provides evidence of sustained demand from tenants, at what is traditionally a busy time of the year for landlords as students and young renters sort out accommodation. While prices paid by landlords for properties are still rising strongly, the increase in rents has more than matched that rise, to reach the highest level we have ever seen.”
The Association of Residential Letting Agents (ARLA) also reports the number of new tenancies is increasing. It claims the average increase in new tenancies moved from 27.5 to 29 for each of its offices at a time when new tenancies are traditionally slow before the universities return. John Crossley, chairman of ARLA, said: “There is buy-to-let activity all over the country that should be worth investigating.”