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Rental yields see improvement

  • 06/10/2003
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Gross yields on rental properties have risen for the first time in over a year, according to a surve...

Gross yields on rental properties have risen for the first time in over a year, according to a survey of buy-to- let trends conducted by Paragon Mortgages.

The lender reported that gross yields rose from 7.9% to 8.1%, reversing the steady decline of the last 12 months.

John Heron, managing director of Paragon Mortgages, said: “House price inflation is clearly stabilising, which is starting to have a positive impact on yields, while tenant demand for the right type of property in the right location continues to be sound.

“Landlords also remain positive about prospects for the year ahead, anticipating growth in their portfolios of 8.2% by number of properties and 8.45% in value.”

Other positive factors include evidence that landlords are finding tenants slightly faster than they were last quarter, with the average number of viewings dropping to 3.6 from 3.4.

While the average period of time a property remains empty has remained unchanged at 2.8 weeks, those landlords with larger portfolios reported that it was getting easier to find tenants, with the average length of time between tenants down from 3.3 to 2.6 weeks.

This positive news was mirrored by the Association of Residential Letting Agents (ARLA), which also found a greater stability in the market emerging in the last quarter.

Although the net annual compound rate of return for outright cash purchases stands at 8.97%, down from 9.3% on the previous quarter, the number of falls in some areas such as the South East is countered by the number of rises in locations such as the North West.

Commenting on the findings, John Crossley, chairman of ARLA, said: “These figures reflect the stability of the buy-to-let market, however investors approach it.”


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