Buy-to-let returns hit a 28-month high

News Category: Industry News

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Total annual returns from buy-to-let investments have reached a 28-month high, according to new figures published today (December 13th).

The returns generated by the average residential property generated returns for a landlord of 21 per cent, compared to 7.4 per cent for stock on the FTSE All Share exchange, the research by Paragon revealed.

At the same time the figures indicated that rents grew by 17 per cent in the past 12 months, reaching £11,300, while yields remained steady at six per cent or above for the 20th consecutive month.

"Returns generated by landlords are very good and compare favourably with alternative investment classes," said John Heron, Paragon's director of mortgages.

"An investment linked to the FTSE All Share made a year ago would have yielded just over 7.4 per cent from both capital appreciation and dividend yield, while the highest yieldinginternet savings accounts earn around 6 per cent. In comparison, the return of 21 per cent on buy-to-let looks particularly attractive," he added.

Looking to the future, he predicted that rents would continue to rise as prospective first-time buyers remained in rented accommodation for longer, while a slowdown in property prices would present opportunities for landlords to add to their portfolios.

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