Landlord yields drop as house price rises outpace rents

Landlords’ yields have dropped almost everywhere, with any rises in rents being outpaced by hikes in house prices.

Countrywide, the UK’s largest agency chain, said that yields declined last month everywhere but in the East of England, where they rose 0.2% to 6.2%, and Scotland where they increased 0.1% to 5.8%.

Yields remained the same in the South-West and the Midlands at 5.7% and 6.5%. The greatest yields are being achieved in Wales at 6.6%, the Midlands at 6.5% and the North at 6.4%.

Average monthly rents rose on two- and three-bedroom properties (up by 0.5% and 0.3% in May to £770 and £884), but went down on one-bed properties (by 0.6% to £674) and on four-bed properties (down by 2.1% to £1,363).

Wales had the greatest increase in average monthly rent, up 4.9% on April, followed by Scotland (up 2.2%), the North (up 1%) and South-West (up 0.5%).

Despite some regional increases, the average monthly rent in England, Scotland and Wales fell 0.2% in May, but rents are still 0.8% higher year-on-year.

The Midlands has seen the greatest decrease in average monthly rents, down 1.4% month-on-month, followed by the South-East and central London, both down 1.3%. Scotland has the lowest average monthly rent at £617pcm and central London the highest at £2,340pcm.

Countrywide draws its data from 5,000 properties on its books.

Commercial director Nick Dunning said: “Despite the decrease in yields in May, rental yields remain strong and are providing attractive returns for buy-to-let investors compared to other types of investment.”
Article courtesy of Landlord Today
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