John Heron, managing director of Paragon Mortgages, comments: "Landlords had a very good year in 2003 with their overall returns outstripping most other forms of investment. The average total return is over 20%, while in some regions it is significantly higher — 37% in the South West, 32% in the North West and 25% in the North and East Anglia."
This month’s Index shows house prices paid by landlords slipping slightly from the peak seen in October, to £123,372, as landlords took advantage of a slower property market in the run-up to Christmas to purchase properties at more attractive prices. As a result, for the first time this year, house price inflation on buy-to-let properties has fallen behind that of the housing market as a whole. Prices paid by investors for property, at £123,372, are 3.1% down on the peak figure of £127,329 reached in October but 12.03% up on a year ago. This contrasts with the Halifax and Nationwide figures of 15.4% and 15.6%.
John Heron says: "Landlords tend to be astute property purchasers and they take advantage of any dips in prices to achieve a good deal and make shrewd investments. As a result, we’re starting to see a lower rate of inflation on landlord property values than in the market as a whole."
Average yields ended the year at 7.37%, slipping slightly for the past couple of months, following several months’ stability over the late summer and early autumn. Over the year, there has been a gradual easing of yields, although buy-to-let still offers rather better yields than most other forms of investment.
