Scotland recorded the largest increase with yields growing from 6.88% (Q4 2004) to 7.37% (Q1 2005). London also showed growth over the period (5.96% to 6.08%) as did the rest of England (6.03% to 6.08%). This is positive news for the buy-to-let market, which saw slight falls in yields between Q3 2004 and Q4 2004.
This quarter also saw London (6.08%) rental yields rise to match average yields across the rest of England (6.08%) for the first time. Landlord Mortgages believes that this can be attributed to house prices across the country showing slight increases while London prices remained stable or fell.
Rental yields for England in Q1 2005 (6.08%) were slightly down on those for Q1 2004 (6.11%). However, yields in Scotland (2004: 7.27%; 2005: 7.37%) and London (2004: 5.96%; 2005: 6.08%) have increased.
Lee Grandin, managing director of Landlord Mortgages comments: “Q1 is traditionally one of the strongest periods in the year for rental yields. In Q1 2005, we see London yields ‘catching-up’ with those offered by the rest of England. We feel that this can be attributed to house prices across the country showing slight increases while London prices remained stable or fell.
“Q1 2005 showed positive growth over Q4 2004. We believe this reflects a cooling housing market coupled with strong rental demand. Many potential first-time buyers are renting while they wait for the market to cool further and this has proved to be highly beneficial for buy-to-let landlords.
“We believe that the buy-to-let market will continue to remain stable in 2005 and is likely to exhibit further gains. This growth may be accelerated by investors preparing for A-Day when they will have the ability to invest in residential property through Self Invested Personal Pensions (SIPPs).”
