Buy-to-let yields remain above 5% - LSL
01-19-2014
Mortgage Solutions
Buy-to-let landlords have continued to enjoy a yield of more than 5% on their properties, research from LSL has found.
The property services firm said they typical rental property returned a gross yield of 5.3% in December, allaying fears the rental market could be damaged by a resurgent first-time buyer sector.
Taking into account capital accumulation and void periods between tenants the total annual return on an average property rose to 8.8%. In absolute terms this represents an average return of £14,372, based on a rental income of £8,189 and capital gain of £6,183.
Seasonal factors saw the average rent in seven of the 10 English and Welsh regions fall, although landlords in the North East and West Midlands experienced rent increases in this period, rising 1.5% and 1.4% respectively.
LSL's David Brown said: "Steadier rent rises, and the usual seasonal dip over the winter shouldn't put off anyone considering a buy-to-let investment.
"Returns have picked up considerably over the last six months, underpinned by solid rental yields and boosted by rejuvenated chances of capital appreciation. Rents will keep rising on an annual basis for the foreseeable future, while buy-to-let mortgages are still becoming more available and at more affordable rates.
"Supply of housing is still seriously restricted in the UK, so much-needed investment looks set to be handsomely rewarded as demand is driven further by an economic pick-up in 2014."