29 Jan

Increasing rents offering healthy yeilds

Increasing rents offering healthy yeilds

Growing demand for rented accommodation has encouraged strong growth in rents paid by tenants, leading to an increase in rental yields and total returns, according to new figures.

Paragon's January Buy-to-Let index shows that rental incomes rose by 2.5 per cent during the month, bringing the annualised rate of growth to 19.4 per cent.

On average, tenants are paying £965 per month for their properties, compared with £808 a year ago. The total annual return for 2007 stands at 21 per cent - three times the level of 2006.

"There's been fall in consumer confidence in recent months, but this appears to be to the benefit of established landlords," said John Heron, managing director of Paragon Mortgages.

He added: "With a cooling in the rate of increase of house prices, yields have also picked up this month and we expect that trend to continue throughout 2008."

Some 90 per cent of buy-to-let investors plan to hold on to their portfolios for the long term and 40 per cent intend to invest more in the private rented sector this year.
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