Buy To Let Rental Yields
QUARTERLY rental yield figures released show rental yields in England are at their lowest ever, falling from 5.9% in Q2 to 5.87% in Q3.
London saw a similar drop (5.99% in Q2 to 6.82% in Q3) while Scotland recorded a small recovery, with rental yields rising from 6.47% in Q2 to 6.77% in Q3.
Although England and London saw a drop in rental yields, this is not necessarily bad news for the overall market.
Although we have seen a fall in rental yields over the last quarter in England and Wales, there is some good news for landlords in Scotland. I believe this can be attributed to house prices north of the border still being lower than those in the rest of the country. With house prices stabilising or even falling in some areas over recent months and buyers pushing prices down, there is little scope for landlords to remortgage their property for full market value. Rental yields therefore have seen a fall as a direct result of that, turning towards a more realistic level.
Over the past year London has seen a fall in rental years from 6.09% in Q3 down to 5.82% in Q3 of the next year.
This can be attributed to the relatively high house prices in the capital, making it increasingly difficult to achieve higher yields.
Similarly, Scotland showed a fall from 6.92 (Q3) to 6.77% (Q3) in the following year, indicating that although house prices are still lower than in the rest of the UK, they are starting to catch up with those in the rest of the country.
Over the same period, England recorded a marginal fall from 6.22% (Q3) to 5.87% (Q3) in the next year.
It is not surprising that rental yields have been falling year on year. This is a development that we have seen for some time now. It was a particular strong year with regards to rental yields and it seems that yields are now turning away from highly inflated figures we have seen in previous years.
Despite these falls, I believe the market will remain relatively stable for the remaining of the quarter. With house prices set to stay at the current level or even slightly falling, there is no need for investors to worry about their property investment.
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