Quarter 2 (Q2) figures 2006 show rental yeilds have fallen to 5.69 per cent in England and 5.70 per cent in London.
Landlord Mortgage said this record low can be partially attributed to landlords keeping rents stable to retain reliable long-term tenants while house prices have continued to rise. Another contributing factor is the significant increase in the level of remortgaged business. In Q2, landlords took advantage of remortgage deals to refinance their properties so they would need lower levels of rental income to cover repayments.
Scotland continues to record higher rental yields than south of the border, displaying only a slight decline to 6.48 per cent (Q2 2006) from 6.58 per cent. (Q1 2006). Despite this decline, year on year the figures show no real change in rental yields, illustrating a new found stability in the Scottish rental market place.
Lee Grandin, managing director, Landlord Mortgages, said: “It is disappointing to see that rental yields have fallen to a four-year low across England but it is not surprising considering market factors. In this competitive climate, landlords are sacrificing increased rental income to retain reliable long-term tenants. This decision is made easier by the recent prevalence of excellent remortgage deals. At Landlord Mortgages, we have seen an 80 per cent increase in the level of remortgage business as landlords flock to refinance their properties and reduce the level of rent required.
“The Scottish market appears to be less volatile than previously as its peaks and troughs are becoming smaller. This is great news for investors looking for long-term stability in this market. Despite yields not being at the level of their 2002 high, they continue to be strong and Scottish buy-to-let property remains a solid investment.
“Over the next few months, we will be watching rental yields available in the capital closely. England generally mirrors the changes we see in London yields so any signs of a pick up in yields in this area will no doubt signal the same for the rest of the country."
