Professional landlords see rise in yields

Professional landlords see rise in yields

John Heron, Paragon Mortgages

Landlords achieved an average yield of 6.5% during the second quarter of 2011, according to Paragon Mortgages.

The buy-to-let lender’s latest PRS Trends Survey reported an increase on Q1 yields, where the average was 6.2%, and on the same time period in 2011 where the average was also 6.2%.

Paragon also found that professional landlords achieved a higher average yield than the smaller-scale landlords surveyed, reaching 6.9% – an increase on 6.5% in Q1.

Landlords were canvassed for their opinions on current levels of tenant demand; 55% of landlords said that, for the moment at least, demand appears to be stabilising. However, 36% believe tenant demand is growing. Professional landlords are more likely to think that demand is increasing – 39% compared to 27% of smaller-scale landlords.

Meanwhile, 44% of landlords expect tenant demand to increase over the next 12 months. A fifth of landlords are on the investment trail with 21% planning to purchase buy-to-let property in the third quarter.

“Strong tenant demand has continued to place upward pressure on rents and we have as a result seen yields strengthen despite the pressure on consumers,” said John Heron, managing director of Paragon Mortgages.

“It is no surprise to see that more experienced landlords achieve better yields with this being driven by their choice of property type and their approach to management,” Heron added.