News from the Residential Property Investor, the bi-monthly magazine for RLA members other artilces from the October / November 04 issue RPI news archive

Wales for high returns, Scotland for potential - October / November 2004

East Midlands has overtaken the North as the region where landlords achieve the highest gross rental yield on their investment, latest figures from Paragon have indicated.

The mortgage lender's latest Buy to Let Index puts the figure at 7.41 per cent. Yields in Yorkshire, which had been 7.31 per cent in August, dropped to 7.28 per cent.

Although rental incomes are highest in Greater London and the South East, the yields shown by the index are the lowest due to higher property prices.

Highest overall return on investment, taking into account both rental income and capital appreciation, were recorded in the West Midlands, where landlords had average returns of 55.2 per cent on the year ­ a total of £51,913, comprising £44,063 in capital appreciation plus £7,850 in rental income, on a property worth £93,976 at the start of the year.

Returns of 43.3 per cent were earned in Wales, and 39.3 per cent in the North West. East Midlands landlords earned 35.8 per cent, while at the bottom of the table, Greater London landlords earned 10.2 per cent on their investments.

'Total annual returns generated by landlords are very healthy, with northern and western parts of the country doing particularly well', said Paragon managing director John Heron. 'Star performers in terms of regions this month are the west Midlands and Wales, the North West and North, where landlords have been making around 40 per cent or more on their investments'.

l Rental yields in England have risen by 3.8 per cent (from 5.99 per cent to 6.22 per cent) over the last three months, buy to let specialist Landlord Mortgages has reported.

It puts this down to increasing demand caused by potential buyers putting off their purchases in anticipation of house price falls.

However, in Scotland there was a 13 fall in rental yields, which were down from 8.02 per cent to 6.92 per cent in the last three months.

'Yet despite this decrease, Scotland, which has consistently outperformed the rest of the UK, still offers the highest yields in the country', said the company.

Managing director Lee Grandin suggested: 'Investors in search of the highest rental yields should consider Scotland as it is still producing the most attractive rental yields and I firmly believe that yields will stabilise. Glasgow, Edinburgh and the Borders are the current buy to let hot spots in Scotland with one bedroom flats giving the best returns.

'The current market holds many opportunities for experienced landlords who should be able to negotiate hard in this buyers market. Also landlords with good, well located properties are not experiencing void periods'.
 

other artilces from the October / November 2004 issue

• Speaking on behalf of landlords
• Wales for high returns, Scotland for potential
• Irish landlords must register
• In brief
• House prices down, annual rise continues
• Sentence too lenient
• Repair costs are rising faster than inflation
• Cambridge flats most costly
• Devil is in the detail
• A woman's touch