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8 April 2008

Paragon reports 2.4% rise in rental yields

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by Gill Montia

Paragon reports 2.4% rise in rental yields

Paragon, the buy-to-let lender, has reported a monthly rise in rental income in England and Wales of 2.4%, for February.

The increase brings the average rent to £11,886 which is 15% above February 2007 levels.

On a regional basis, last month saw average rental income for London rise to £20,574; in the south west to £15,970 and in East Anglia to £12,738.

February also saw capital growth rise by 1.5%, bringing the average value of an investment property to £187,597, compared with £184,908 in January. Gains were at their highest in London, the south west and East Anglia.

Rental yields, which remained flat at 6.3% in January, rose 0.3% in February.

Landlords with properties in the north-west and the north saw the biggest gains, with yields rising to 7.6% and 7.3% respectively.

According to Paragon, 13% of landlords own more than 100 properties and amateur buy-to-let investors remain strictly in the minority.

In the current market conditions, larger landlords are better placed to secure mortgage funding and John Heron, Paragon’s director of mortgages, believes they will continue to invest.

He sees professional landlords as having remained steady in their outlook throughout the credit crisis and predictions of a housing market crash.

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