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A Recovery In Rental Yields

According to data that was released by the company “Landlord Mortgages” seems to suggest that the rental yields are starting to show signs of recovery. Apparently these rental yields are starting to recover from their lengthy spiral downward. According to this data released by Landlord Mortgages, the Scottish rental yields have actually increased over the course of the last quarter. In the second quarter the yields were at a 5.85% rate and then in the third quarter they had risen to 6.03%. The Landlord Mortgage data release also says that the gap that was between the yields that are north of the border and the yields in the rest of the United Kingdom had risen to 0.61%. Between the second and third quarter most of the English yields managed to stabilise and those yields remained at 5.42%. While this was the case for most of the nation, London happened to be the single region that saw a continued spiral downward in yields. Their yields fell from 5.38% in the second quarter to 5.25% in the third quarter.

There was also a downward spiral in rental yields. This downward spiral has been obvious ever since 2006 came to a close and now it might be finally nearing its end. Between the boom in housing prices that was experienced in the United Kingdom over the last ten or so years and the rate of rentals staying the same, a relatively low rental yield has taken place over the course of the last twelve months.

Some investors that put money into buy-to-let properties have had to rely on the appreciation of their capital in order to see any sort of profit. However, because the price of housing seems to be leveling off, these investors might be running out of options. For those who invest in buy-to-let properties, any sign that the rental returns have stopped falling will be welcome.

In Scotland, the rental yield increase illustrates that the appreciation of capital has started to stabilize. This is also an illustration of the fact that the rental properties in Scotland are becoming quite the profitable asset to own.
According to one employee of the company Landlord Mortgages, next quarter should show an even further increase in rental yields. This employee goes on to comment that the recent upset that has been experienced in the “sub prime” housing market might even lead to an increase in the demand for buy-to-let investments.

One of the reasons that the housing market has become so unstable recently is that most people who buy mortgages are already financially strapped. Because of the slowing down of purchasing, banks are forced to raise their mortgage and interest rates. This raising of the rates discourages people from even applying for a mortgage and encourages them to rent their homes instead. This makes the buy-to-let investors happy, but is troublesome for the rest of housing market. It is a vicious circle and it might not have an end for a while.

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