Landlords enjoy improvements in yields

Tuesday 17th April 2012

The first rental yield league table of 2012 has revealed that landlords in the North-West are achieving the highest average rental yields.
 
Research commissioned by specialist buy-to-let lender Paragon Mortgages shows that landlords in the North-West are enjoying a yield of 6.6% – an increase from 5.9% in Q4 2011.

The northern regions dominate the top spots, with landlords in the North-East achieving an average yield of 6.5%. Following in third place is the South-West with a yield of 6.4% and the East of England with 6.3%.

Yields, a property’s annual rental income as a proportion of its current value, are an important factor for landlords when making a property purchase decision.

Independent researchers BDRC Continental worked with Paragon Mortgages to survey more than 500 landlords – some of which were Paragon Mortgages and Mortgage Trust customers – in the first quarter of this year.
 
The overall average yield achieved by landlords in Q1 was 6.2%, an increase on Q4 where the average yield was 5.9%. However, those Paragon landlord customers who took part in the survey reported a higher than market average yield of 7.3%.

A separate survey by Paragon competitor Mortgages for Business has shown that yields on HMOs reached 10.7% – the highest ever – in the first quarter.

It estimated that mainstream ‘vanilla’ yields for buy-to-let landlords are 6.3%, almost identical to Paragon’s figure.

Mortgages for Business also reports that the average overall number of BTL products available over the quarter and the number of lenders operating in the sector has remained unchanged quarter on quarter.

Over the last three months, an average of 25 lenders offered an average of 442 BTL products. However, on  March 23, 472 BTL mortgage products were available, which is the highest number of ‘off-the-shelf’ products available so far in 2012.