Rental yields are showing signs of recovering from their long-term downward spiral, says data produced by Landlord Mortgages according to a report by moneyextra.com.
A report on the website says rental yields in Scotland have increased by 0.18 percent over the last quarter (from 5.85 percent in Q2 to 6.03 percent in Q3). This widens the gap between yields north of the border and the rest of the UK to 0.61 percent.
Yields in England stabilised over the last quarter, remaining at 5.42 percent. London was the only region to see a continued downward spiral in yields, falling to 5.25 percent (5.38 percent in Q2).
The report adds that the fall in rental yields, evident since the end of 2006, may now be coming to an end. The house price boom experienced in the UK over the past decade, coupled with rents remaining static, has resulted in fairly low rental yields over the last year.
Buy-to-let investors have relied on capital appreciation to make a profit but with house price rises levelling off; this may no longer be an option. Any indication that rental returns are no longer falling will be welcome news to landlords.
The increase in rental yields in Scotland shows that capital appreciation in the region is stabilising and returns on the rental property are becoming more profitable.
Lee Grandin of Landlord Mortgages said he expected expect rental yields to increase further next quarter and the turmoil experienced in the sub prime market could lead to an increased demand for buy-to-let property.
