What's happening with capital growth & yields for landlords this month?

publication date: Mar 23, 2015
 | 
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

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What's happening with capital growth & yields for landlords this month?

In our rental summary, we track what’s happening to demand and supply as well as returns for landlords – this helps you know whether rents can go up or need to be kept competitive.

Download my full rental summary for March 2015

Here's what the reports are saying about capital growth & yields
BMM Solutions “Despite the 1.5% increase in 2014, average gross rental yields fell slightly from 5.5% in the first half of 2014 to 5.3% in the second half of the year. Again, there is a distinct north/south divide with the highest rental yields found in the north of the country: North (6.8%), followed by the North West (6.4%), Northern Ireland (6.4%), Scotland (6.3%) and Yorkshire and the Humber (6.1%). The lowest rental yields were found in London (4.7%), followed by the South West (4.9%) and the South East (5.0%).”

RICS “Expectations for rental growth pushed higher with respondents, on average, envisaging rental values rising by 2.6% over the coming twelve months with growth accelerating thereafter to an average of 4.9% per annum over the course of the next five years. (Feb 15)”

Download my full rental summary for March 2015

Here are my comments on capital growth & yields
“Buy to let earns money in two ways, firstly, through capital growth, and secondly, through income. This produces a dilemma for buy to let investors because prices typically go up in excess of rents. This means, although you can make money from capital growth, the more money you make this way, the tougher it is to generate a cash flow positive income from rents when buying new properties to let. Currently, there are many areas down south which with yields at less than 5% are growing in value, but the rents barely cover costs. In the meantime, there are good yields to be secured in the North - but many areas haven’t recovered price wise from the recession and aren’t seeing any real growth currently either.”

Download my full rental summary for March 2015

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