Buy-to-Let - Returns highest for 5 months

Average total returns generated by landlords have reached their highest level in 5 months, as both rents and property values continue to rise. Regions with the highest total returns have been East Anglia 29.0%, Wales 25.6% and the North 23.9%. Meanwhile, rents over the past quarter are up 8.2% and house prices paid by landlords up 5.5% to £171,803, according to the latest Paragon Buy-to-Let Index. As a result, total ungeared returns generated by landlords in March stood at 12.9%, compared with 8.0% in January and 10.0% in February.

Nigel Terrington, chief executive of Paragon, says that net inward migration is increasing Britain's population by 500 people per day, according to recent reports based on National Statistics data. And there is a clear link between this influx of people and the growth in demand for rented homes, with the vast majority of new arrivals in the UK choosing the private rented sector for their accommodation needs.

Paragon's findings are corroborated by the latest quarterly landlord survey from ARLA, the Association of Residential Lettings Agents, who recently announced that the annual rate of return for a cash purchase of a residential rental property currently stands at 11.2%.

The 8.2% increase achieved for rental incomes over the last quarter comes after a 1.6% rise over the last month. The highest rental incomes have been achieved in London £17,258, the South West £12,016 and South East £11,365.

Terraced houses continue to generate the highest yields, at 6.4%, closely followed by semi-detached houses, at 6.3%. Yields on detached houses have risen 2.5% over the last quarter to 6.2%, whilst flats have achieved the lowest yields at 5.6%.

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2007-05-01 10:32:28 © Moneyextra.com