Buy-to-let 'about to falter'

A leading landlord has warned that rising interest rates will severely hit the yields that buy-to-let landlords can expert in the future.

In an interview with the Financial Times, Andreas Panayiotou, chairman of the Ability Group, said that the buy-to-let investments could be squeezed by rising interest rates and stagnant rents.

He told the paper: "Investors are joining in because people say that residential is great, but they are not experienced enough.

"There are blocks across the country where most of the flats have been bought by buy-to-let investors and many are empty."

In particular, Mr Panayiotou explained that yields in places like London have fallen to around three or 3.5 per cent. After agency fees, voids and repairs, this could equate to just a two per cent annual yield.

"What's the point of accepting a yield of three per cent when you can get six per cent in the bank?" he explained to the paper.

However, recent data from Paragon showed that rents in the UK typically rose by 3.04 per cent in the last quarter.

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