Higher rental incomes gives buy-to-let sector a boost

07 April 2008 / by Joy Tibbs
Higher tenant demand is benefiting landlords in England and Wales according to Paragon, with the highest incomes for February registered in London, the south west and East Anglia.

Rental incomes in the UK rose 2.4 per cent in February to £11,886 compared with January revenues, and 15 per cent compared with February 2007. According to the buy-to let mortgage specialist, average rental incomes for London totalled £20,574, while in the south west the average was £15,970 and in East Anglia average rental income was £12,738.

Yields were flat with January yields at 6.3 per cent, but had risen 0.3 per cent compared with the previous quarter. In terms of yield, Wales, the north west and the north were the biggest winners, with yields of 7.6 per cent, 7.3 per cent and 7.2 per cent, respectively.

In terms of value, investment properties saw an increase of 1.5 per in February to £187,597 compared with £184,908 in January. Unsurprisingly, London, the south west and East Anglia enjoyed the highest property values at £362,197, £224,473 and £201,210, respectively. The average investment property bought 12 months ago has generated a return of 17 per cent when capital gains and rental income are taken into account.

House type also affected the yield registered for the month. Terraced houses yielded the most (6.9 per cent) in February, followed by detached houses (6.6 per cent), semi-detached properties (6.5 per cent) and flats (5.7 per cent).

The highest returns on initial investments were seen in East Anglia, with an average return of 40.5 per cent and a total gross return of £60,718. At the other end of scale was the north of England, which saw a -8.5 per cent return on initial investment and a total gross return of -£9,920.

© Fair Investment Company Ltd