Landlords keep investing in buy-to-let property

Landlords are investing more than ever in buy-to-let property, new figures reveal.

According to Paragon Mortgages’ buy-to-let index, investment property prices rose 2.9 per cent in May, to an average of £168,935.

And this is despite rental returns staying more-or-less constant.

On average, landlords earn £10,189 a year, or £849 a month, per property - this is a rise of just £6.33 a month compared with April.

"With rents stable, tenant demand healthy and market confidence solid, landlords continue to purchase new properties in a generally upward moving property market," said Paragon Mortgages managing director John Heron.

"Investor activity has been increasingly strong over the past nine months.

"Investors are dispassionate purchasers and buy in response to growing tenant demand, rather than in the expectation of short term capital appreciation.

"They purchase properties in locations where they believe that tenant demand will remain sound over the medium to long term, paying particular regard to local amenities, transport links and the individual preferences and expectations of the people who are likely to rent the property."

Currently rental yields are an average of six per cent, but this varies regionally.

In Greater London average yields are as low as 5.7 per cent, while in the east Midlands and the north-west they average 6.6 per cent.

"Landlords are experiencing solid demand for rental properties as economic conditions remain sound and interest rates are stable.

"There is a long term structural shortage of good quality residential property in the UK, and demand for it is growing steadily.

"In addition to the demographic growth in the number of households, there is a steady influx of migrant workers, who tend to choose rented properties for their accommodation needs.

"Over the next five to ten years, the private rented sector is expected to grow steadily on the back of a stable economic environment." XXX