The quarterly renatl yield figures also showed London figures dropped from 5.99per cent (Q2 2005) to 5.82per cent (Q3 2005). However, Scotland bucked this trend and recorded a small recovery with rental yields rising from 6.47% in Q2 2005 to 6.77% in Q3 2005.
Although England and London saw a drop in rental yields, this is not necessarily bad news for the overall market. Lee Grandin, managing director of Landlord Mortgages commented: "Although we have seen a fall in rental yields over the last quarter in England and Wales, the UK buy-to-let market is still very healthy."
"We believe that overall rental yields are dropping not as a result of reduced rental demand but due to other market factors. House prices are stabilising and, in some areas, even falling forcing many vendors to drop the price of their properties in order to sell them. This has created an environment in which landlords are finding it harder to find under market value properties, as sellers can't lower their prices further. This has led to yields on newly purchased properties falling causing overall yields to drop."
"Despite these falls, I believe that the market will remain relatively stable for the remaining quarter of 2005. With strong rental demand and a historically strong housing market, there is no need for investors to panic about their property investment."
Scottish Properties Boast Best Yields
Scotland has consistently shown the best rental yields across the country since Landlord Mortgages started tracking rental yields in Q3 2002. Yields hit a high of 8.43% in Q4 2002 and in line with the general market trend have gradually dropped since then. They fell to a low of 6.47% in Q2 2005 before recovering slightly to rise to 6.77% (Q3 2005).
Lee Grandin, Managing Director of Landlord Mortgages said: "Properties north of the border have always shown healthy rental yields due to a combination of strong demand for quality rental accommodation and lower house prices. On average, Scotland provides landlords with a 1.05% higher rental yield than those available in London or England.
"While most areas in Scotland are able to provide you with good investment opportunities, I currently tip Glasgow, Edinburgh and the Borders as my favourite hot spots with 1 bedroom flats giving the best returns."
