Rental yields at an all-time high

Posted: 24 Jun 2008 14:34:22 GMT

As news of falling property prices hit the headlines again yesterday (June 23rd), good news comes to buy-to-let investors.

As news of falling property prices hit the headlines again today (June 23rd), good news comes to buy-to-let investors.

Possibly as a result of homeowners' fears that prices will fall further, an increasing number of people are selling their properties and heading for the rental market.

According to Paragon Mortgages Buy-to-Let Index, rental yields have hit 6.5 per cent which is their highest level since the start of 2006.

John Heron, managing director of Paragon Mortgages, detailed his thoughts on the phenomenon: "Strong tenant demand has been pushing up rents, allowing landlords to achieve better yields than they've seen for more than two years."

He went on to explain that it wasn't just supply outstripping demand that was pushing profits up. He said: "with lower property prices and higher rents, the yield they can achieve on a carefully selected and well managed investment property can be significantly higher than other forms of investment."

First-time buyers unable or unsure about being given approval on a mortgage are also turning to the rental market which is pushing demand even further.

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