Rental yields fall

Average rental yields on buy-to-let properties fell in the second quarter of this year, the latest buy-to-let index compiled by Mortgages for Business shows. Returns on residential rental properties fell from 6.4 per cent to 5.8 per cent between the first and second quarters of 2015, led by declines in the Houses in Multiple Occupation (HMOs) sector which saw yields drop 1.3 per cent to 9.3 per cent. The figures also reveal that the average loan-to-value (LTV) ratio in the second quarter of 2015 for standard buy-to-let and multi-unit freehold blocks remained unchanged at 66 per cent and 67 percent in relation to the first quarter of this year. David Whittaker (left), Managing Director of Mortgages for Business, said, “While rental yields are still robust they seem to have lost the momentum they were gathering between the end of last year and the start of this one.” But Whittaker pointed out that multi-unit freehold blocks seem to have avoided the yield downturn, demonstrating once again that complex property types produce higher yields “because they offer tenants more features and facilities”. He added, “While many landlords had hoped that the improving economic climate may have pushed loan-to-value ratios even higher, the…

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