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Rental Yield on the UP


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Paragon Mortgages' latest Private Rented Sector Trends report has found that landlords experienced strengthening yields in the first quarter of 2009, prompting many to look to acquire residential investment property this year.

The average yield across landlords' portfolios rose in the first quarter to, buy to let mortgages, 6.2%, up from 6.1% in the last quarter of 2008. The lender highlighted yields have been rising steadily since February 2008, when they stood at 5.7%.

One in five landlords (20%) said they intended to purchase residential investment property in 2009, with a further 28% still undecided. Four out of five landlords who plan to purchase property said lower prices in the current market was a driver behind their decision. Nearly half (48%) said that strong yields also played a part in their purchasing decision, while 73% said that property represented better long-term returns than other asset classes.

John Heron, managing director of Paragon, said: "The UK continues to experience a chronic shortage of housing and rising levels of tenant demand. Landlords are attracted to residential property investment because of the control they have over their investments and the strong returns they can achieve. While other forms of investment can be volatile, buy to let continues to bring in consistently strong yields and over the long-term

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