Ten percent yield for 1 in 10 buy to let properties

by Property118.com News Team

9:45 AM, 22nd January 2013
About 7 years ago

Ten percent yield for 1 in 10 buy to let properties

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Ten percent yield for 1 in 10 buy to let properties

One in ten properties in the UK are delivering gross rental yields of 10% or more, according to Countrywide’s 2012 Lettings Index.

Rising rents and stabilising house prices are making rental yields highly attractive to buy to let investors, with an average yield of 6.2%.

The largest lettings network in the UK found that of all properties purchased and rented through Countrywide in 2012, approximately half achieved gross rental yields of more than 7%.

For the second consecutive year, the number of new tenants registering for private rented accommodation has increased by 25%, with more than 340,000 new tenants signing up to let a property in 2012, up from more than 275,000 in 2011.

Buy-to-let mortgage lending in the first nine months of 2012 amounted to £11.8billion, up 19% when compared to the same period in 2011.* Nick Dunning, Group Commercial Director at Countrywide, noted: “The availability of more competitive buy-to-let mortgage products, along with fantastic yields, is creating a good opportunity for investor landlords to expand their portfolios to match the high demand for rental accommodation, as renting for longer is becoming the new norm.”

Regionally, the South of England recorded the highest volume of new tenants registering with Countrywide in 2012 – the 116,000 applicants represented a 27% rise from the previous year – the growth of new tenant applicants was highest in the North of England, where Countrywide recorded a 49% increase to almost 63,000. Countrywide figures also show that the average rent in England, Scotland and Wales in 2012 was £827 per month and in London, more than £1,600 per month.

Commenting further on Countrywide’s Annual Lettings Index, Nick said: “This time last year, ‘Generation Rent’, was a growing phenomenon but it appears that it’s now here to stay, for the foreseeable future anyway. More people are renting because they cannot get on the housing ladder without the help of the bank of Mum and Dad. As a result, they have to rent for longer while saving for a deposit. In fact, the results of a survey commissioned by Countrywide with YouGov in November 2012, showed nearly two thirds (63%) of private renters cited deposit affordability as a factor preventing them from buying at this time. Encouragingly, the survey also revealed that home ownership aspiration remains high as nearly a third (29%) of 18-34 year olds surveyed believed that home ownership in the next three years is an achievable goal.”

Table A:  Regional average rent and average yield 

Region

Average Rent

Average Yield

London

£  1,651.00

6.09%

South

£      864.00

5.99%

North

£      603.00

6.55%

Midlands

£      617.00

6.60%

Scotland

£      596.00

5.75%

Total

£      827.00

6.18%

Table B: Annual increase in new tenants registering for rental accommodation

 

Region

Growth in tenant demand

London

6%

South

27%

North

49%

Midlands

38%

Scotland

18%

Total

25%

 



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