Buy to Let
Rental yields continue to drop
Rental yields are continuing to fall for buy-to-let investors, a study has shown.
Rental yields, which represent an investor’s rental return as a percentage of capital investment, have been gradually decreasing since 2003, with rental yields in London now falling at the fastest rate.
Lee Grandin, managing director of Landlord Mortgages, said: “We can attribute this continual trend of falling rental yields to the fact that there is greater investment occurring in the Southern regions – especially London.
“Huge City bonuses this year have led to a surge of buy to let in the capital, pushing prices up in this area.”
Rental yields in London fell from 5.96% in the first quarter to 5.38% in the second quarter, the largest decline in the UK.
Scotland recorded the lowest decline, falling from 5.99% to 5.85%.

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The capital’s decline in rental yields has been affected by recent rises in house prices.
The average London house price jumped up to £300,000 in June, causing rental yields to fall.
Grandin said: “These falling yields are not a sign of the buy-to-let market weakening, quite the opposite.
“As landlords begin to increase their rents in line with the value of the property, we expect to see rental yields back up again.”