Buy to Let Investment Remains Positive with High Rental Yields

If you’re looking for a solid investment with a good return then buy to let investment remains a great choice. That’s the view of a leading property expert after new data from one of the UK’s biggest rental agencies showed that rental yields in the UK remained strong in 2012, with great benefits for those interested in buy to let investment.

Countrywide’s annual lettings index has revealed that the average yield of properties purchased and rented through the agency was 6.2 per cent in 2012. And, with one in ten properties returning a yield of 10 per cent or more, it’s clear that buy to let property offers a better potential return than other asset classes. Islay Robinson, director of large mortgage broker Enness Private Clients certainly thinks so.

Huge demand for buy to let investment keeps yields high

Countrywide’s annual lettings index is based on an analysis of 54,000 properties in England, Wales and Scotland. It showed that approximately half of these properties achieved gross rental yields of more than 7 per cent in 2012 with one in ten properties delivering gross yields of 10 per cent or more.

Countrywide group commercial director Nick Dunning says: “This time last year, ‘Generation Rent’, was a growing phenomenon but it appears that it is now here to stay, for the foreseeable future anyway. More people are renting because they cannot get on the housing ladder without the help of the bank of Mum and Dad.

“As a result, they have to rent for longer while saving for a deposit. In fact, the results of a survey commissioned by Countrywide with YouGov in November 2012, showed nearly two thirds – 63 per cent – of private renters cited deposit affordability as a factor preventing them from buying at this time.”

First time buyer lending has risen in recent months, partly thanks to the government’s Funding for Lending programme. Figures from the Council of Mortgage Lenders show that 21,700 loans worth £2.7 billion were advanced to first-time buyers in November 2012. This represents an 8 per cent rise compared to October and a 24 per cent on November 2011.

However, Mortgage Introducer reports that the number of new tenants registering for private rented accommodation has increased by 25 per cent for the second consecutive month. The number of new tenants increased from 275,000 in 2011 to 340,000 in 2012.

“With the average rental yield exceeding 6 per cent, it’s clear that buy to let remains a strong choice for anyone looking to maximise their investment returns,” says Islay Robinson, director of high value mortgage broker Enness Private Clients. “Buy to let lending rose by 19 per cent in the first nine months of 2012 when compared to the previous year, illustrating that the sector remains popular with investors.

“There is strong competition in the buy to let mortgage market which has resulted in some excellent deals for buy to let investment. And, with these Countrywide figures showing that the demand for property and the average rental yields remain strong, it’s a great time to be considering buy to let as an investment.”