Gross rental yields and annual returns remained stable in August 2015, according to the latest buy-to-let Index from Your Move and Reeds Rains.
The gross yield on a typical rental property in England and Wales, before adjustment for factors such as void periods, was 5.1 per cent last month. This was the same percentage as in July and a little higher than 5 per cent in August 2014.
On average, landlords in England and Wales have seen returns of 9.3 per cent over the twelve months ending August 2015 – down from 13.4 per cent in August 2014 but the same as 9.3 per cent seen in the previous month of July.
This means that the average landlord in England and Wales has seen a return of £16,856 in absolute terms, before deductions such as maintenance and mortgage payments. Of this, the average capital gain contributed £8,323 while rental income made up £8,533 over the twelve months to August.
“When purchase values cool, rental yields tend to assist in a soft landing for total returns, and this has been the case over the last six months or so. However, the picture in the purchase market is now an optimistic one, and may boost landlords’ prospects further this year. With mortgage rates still likely to remain low for some time, the outlook for the property market as a whole is positive – and the opportunities for landlords to get involved are excellent,” Adrian Gill, director of estate agents Reeds Rains and Your Move, said.
Tenant arrears made up 9.9 per cent of all rent payable in August 2015, up from 8.4 per cent in July 2015 and 8.0 per cent in August 2014. This compares to the all-time record for rent in arrears set in February 2010, at 14.6 per cent of all rent due.
“Rents are being bid up by the vast majority of tenants, many of whom are seeing their incomes rise substantially for the first time in many years,” Gill added.
“However, not every household shares the same bank account. Compared to rapidly growing demand there is a real shortage of available properties to let across the country. This means that inevitably, rising rents will not be good news for everyone.
“The long-term trend in rental arrears is still positive, and we will be releasing new, separate figures on the most serious arrears very soon. However, there is a need for action. This involves more investment from landlords in properties to let – and action from the government to allow the building of more new homes of all tenures,” he said.
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