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UK landlords are struggling to achieve significant yields on their rental properties, according to new research from the Your Move Buy to Let Index.
According to the data, the fall in rental yields comes despite average rents rising 2.4% year on year in England and Wales.
The average rental yield was 4.4% in October 2017, down from 4.8% compared to the same time in 2016, and flat month on month.
The survey found that rental yields were lowest in London (3.2%), the South East (3.3%) and the South West (3.3%).
The fall in rental yields comes despite average rents increasing. England and Wales have seen a rise of 2.4%, with the East of England and the North West recording the greatest rent increase at 3.2% and 3.1% respectively.
London and the North East were the only regions where average rents have fallen, with both seeing a 1% drop.
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how do landlords survive on a 3.3% yield
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
Southern Landlords Love to gamble on the chance of capital appreciation.
_________________________________________________________________________My posts are not financial advice, just a rambling guy passing time on a coffee break.The team at Bespoke Finance offers advice, including Limited Company Buy-to-Let , HMO Conversion and Cheap Life Insurance._________________________________________________________________________
That's is a Big Gamble with S24 and PRA lending rules
Perhaps the properties were bought with a yield of 12% and have fallen to that level due to increases in the property value.
God knows depends how you work out yield some use todays value others use purchase price
but 3% is very low indeed
Yields have to be put into context to have any statistical worth
If my property doubles in price and as a result the yield on capital value halves I am happy
Someone who puts £250 pcm into a traditional pension might think 0% net BTL yield is just fine
Jonathan Clarke. http://www.buytoletmk.com
Rental income divided by the mortgage is the best yield to me.
I do not believe yields have fallen this year unless you are doing LHA and not getting the rent.
Yield is risk and a higher yield is required to compensate investors for taking a higher risk with their money. Prime London yields less than 3% while you can find more than 10% yields for bedsits in the north. You are being paid for taking a greater risk. Within this yields tend to fall if confidence in the asset rises, pushing the capital price higher thus squeezing the yield. So its not always a bad thing. You can get the situation where both capital prices fall and yield are stagnant or falling, but that's generally in a recession.
The other thing here is for low sub 3% yields you tend to be talking properties valued in tens of millions, so there is still a lot of money to be made (and management fees to be covered ) with a low yield. Don't forget your clients are likely to be JP Morgan or Deloitte with a very low risk of default. So it all depends on the capital invested.