Landlords optimistic on yields and rents

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by Gill Montia

The buy-to-let market has surprised analysts with its buoyancy in the face of rising interest rates and restrictions on lending, but new data from Bradford & Bingley (B&B) confirms that property investors remain confident.

Rental yields (what a landlord can expect to receive in rent, expressed as a percentage of the purchase price of the property) are holding steady at an average 5.72% and in its research, B&B discovered that many already active in the sector have plans to increase their portfolios over the coming months.

The survey questioned 3,800 UK landlords and found that 60% of respondents were undaunted by warnings of a buy-to-let crash, with 86% intending to increase or retain their portfolios over the next six months.

Respondents held an average of 6.1 properties, compared with an average of 5.7 in June of this year.

With regard to rental income over the next six months, 95% of those surveyed believed rental yields will remain strong: 33% of respondents expected yields to rise and 62% expected them to remain level.

Thirty-seven per cent of landlords surveyed reported that rent levels were higher than 12 months ago and 52% stated that there has been no change in levels in the past year.

Around one-half of those investing in property to rent were looking for capital growth and 43% are expecting their properties to provide them with a retirement income.