Despite the slowdown in the buy-to-let market caused by Stamp Duty increases, investors earned an average gross rental yield of 5.3 per cent in the second half of 2016, it has been revealed.
Buy-to-let investors continue to profit
During this time, annual consumer price inflation averaged only one per cent meaning that landlords earned a return of more than four per cent on their investment, with an average rental income of £766 per month.
This is according to BM Solutions, who revealed that in the north of England yields were as high as seven per cent. In Northern Ireland, yields sat at 6.5 per cent and in the north west of England they were recorded at 6.4 per cent.
On the other hand, the capital saw the lowest rental yields, with a recording of 4.4 per cent in London. The south east and south west weren’t far ahead either, with yields of 4.9 per cent registered for both.
Phil Rickards, head of BM Solutions, commented: “Rental yields remain strong, still offering investors high real returns.
“Typically buy-to-let investors in northern areas tend to benefit from lower property values providing higher yields, whereas southern regions have the lowest yields given the higher housing costs.”
Perhaps unsurprisingly, rents remained highest in Greater London at £1,591 – 45 per cent higher than that in the south east. Meanwhile, the south east was revealed to be the second-highest region, with rents 108 per cent greater than the UK average.
Changes to the Buy-to-Let market
Such revelations come amid a slowdown in the buy-to-let market due to changes to Stamp Duty regulation and the tax-deductible nature of mortgage payments for landlords.
Michael O’Brien, director at Dagenham-based Access Financial Services, believes buy-to-let continues to be a strong investment option.
He said: “The will of the people to own a second property has not diminished due to the tax changes, but that could be due to naivety for some people due to a lack of information. Over the next few years, you could see a shift.”