Landlords report increase in rent yields

Landlords are seeing rent yields rise consistently after a large period of static returns, a new study has indicated.

A survey of landlords by Paragon Mortgages found that the average yield - the rental income of a property as a percentage of its current value - reached 6.4 per cent during the second quarter of the year, up from 6.2 per cent in the first quarter.

This finding marked the second quarter in a row that yields had increased.

Additionally, respondents said that they are seeing large levels of demand from tenants and one-third predicted that demand will increase over the next year, with half speculating that it will remain constant.

"Landlords have enjoyed increased levels of tenant demand throughout 2008 and 2009 and it looks like that will continue into 2010," said John Heron, managing director of Paragon Mortgages.

"A lack of available mortgage finance makes it difficult for potential homeowners to purchase property and many people remain unwilling to commit to purchasing a home in the current house price environment."

Mr Heron added that landlords are benefitting from the strong demand still being seen from traditional users of the private rented sector, such as young professionals and students.

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