Rental yields might not be a measure of success
By |Published On: 9th November 2016|

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Rental yields might not be a measure of success

By |Published On: 9th November 2016|

This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.

A leading market peer has stated that traditional measures of gauging buy-to-let success are changing.

Property expert Kate Faulkner suggests that rental yields are not necessarily a key indicator of a successful investment.

Appreciation

Faulkner believes that falling capital appreciation and small rent rises in many regions have led many yields to improve.

However, she feels that other factors and obstacles obstructing landlords making profits are not being taken into account. These include costs to landlords covering:

  • health and safety
  • energy efficiency
  • reduced tax benefits
  • phased cut in landlords mortgage interest tax relief
Rental yields might not be a measure of success

Rental yields might not be a measure of success

Writing in her latest Propertychecklists newsletter to clients, Faulkner said: ‘Although yields are a useful measure when buying, they won’t help landlords understand the impact of lower profitability levels moving forward. It is essential that landlords who have posted their tax returns now take these to a property tax expert to understand the future viability of their investment and to know if they are likely to have to put money in.’[1]

Warning

In addition, Faulkner issued a warning for investors in the North of England. She said that those taking advantage of low purchase prices and better capital yields should future-proof their profitability by making sure capital growth is secure when they buy, in comparison to relying on natural price growth to deliver their returns.

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/11/yield-no-longer-the-key-measure-of-buy-to-let-profitability-says-lettings-expert

 

 

About the Author: Em Morley (she/they)

Em is the Content Marketing Manager for Just Landlords, with over five years of experience writing for insurance and property websites. Together with the knowledge and expertise of the Just Landlords underwriting team, Em aims to provide those in the property industry with helpful resources. When she’s not at her computer researching and writing property and insurance guides, you’ll find her exploring the British countryside, searching for geocaches.

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