Buy-to-let yields remain robust despite falls in transactions

The most recent figures from BM Solutions show that buy-to-let investors in the UK enjoyed gross rental yields of 5.3% during the second half of 2016.

Annual consumer inflation averaged at just 1% during the same six-month period, meaning in real terms, landlords received a healthy return of over 4% on their investment.


Over the same period, landlords were earning an average rental income of £766 per month from their property.

In terms of yields, the North leads the way, but average rents in London are over half the national average.

Data from the report shows that there was a distinct North-South divide. The North has the highest yields at 7%, followed by Northern Ireland (6.5%) and the North West (6.4%).

The lowest yields were in London at 4.4%, followed by the South East and South West, both at 4.9%.

Rents in Greater London remain substantially higher than elsewhere in the UK at £1,591. In fact, the average monthly rent in the capital is 108% higher than the UK average of £766 and 45% above that in the South East (£1,095.)

Northern Ireland has the lowest rent in the UK, with an average of £437pcm.

Buy-to-let yields remain robust despite falls in transactions

Buy-to-let yields remain robust despite falls in transactions

Buy-to-let falls

Buy-to-let property purchases with a mortgage during the second half of 2016 fell by 41% to 38,303-the lowest six-monthly transaction numbers since the 36,600 recorded in the opening half of 2013.

Alteration in stamp duty rules and the deduction of mortgage-payments for landlords have had a detrimental impact on the market. In all, buy-to-let purchases with a mortgage in 2016 were 13% lower than in 2015 at 102,100.

Phil Rickards, Head of BM Solutions, noted: ‘Rental yields remain strong, still offering investors high real returns. Typically buy-to-let investors in northern areas tend to benefit from lower property values providing higher yields, whereas southern regions have the lowest yields given the higher housing costs.’[1]

‘In the second half of 2016 the market slowed with buy-to-let transactions falling by 41% compared to the same period a year earlier, as tax changes and stamp duty rules have inevitably left an imprint on the market. However, demand for rental properties remains high and returns have remained strong in the past six months despite the challenges that have faced the market during that time,’ he concluded.[1]



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