Buy-to-let yields surge again

Rental yield for buy-to-let investors rose again in January to reach a two-year high, one new report has suggested.

The Paragon Mortgages buy-to-let index found that average yields spiked to 6.3 per cent last month alone - a 0.3 per cent rise on December and the highest level recorded since March 2006.

Analysts say worsening conditions in the housing market coupled with the ongoing credit crunch are combining to deter many from taking out a mortgage, resulting in the surge in demand for rental property.

"Commentators who predicted that the current economic climate would translate into stronger demand for rented homes and higher rents are being proved right," commented John Heron, Paragon's director of mortgages.

"Since September, we have seen one of the strongest periods of rental growth ever. This, together with the easing of house price inflation, has translated into higher yields."

A recent survey by the Association of Residential Letting Agents found that four out of ten buy-to-let investors were planning to increase their portfolios in 2008.

News posted on 26th February, 2008