Buy-to-let income up

Rental income for buy-to-let investors rose in England for the first time in six months at the end of 2005.

Quarterly rental figures from Landlord Mortgages show overall rental yields in England rose from 5.87 per cent to 6.03 per cent in the final three months of last year.

This rise ends six months of falling yields in England - however returns in Scotland fell in the final quarter, although they remain above levels in England at 6.53 per cent.

"Despite dire predictions for the future of the buy-to-let industry at the start of 2005, last year saw the overall market stabilise and remain healthy," said Lee Grandin, managing director at Landlord Mortgages.

The last three months of 2005 also saw rental yields for buy-to-let investors in London increase from 5.87 per cent to 6.27 per cent.

High house prices have traditionally seen London return the weakest rental yields out of all UK regions tracked by Landlord Mortgages' survey. But over 2005 the gap between returns available in the capital and the rest of the country narrowed.

Mr Grandin noted: "London saw a significant increase due to high house prices preventing people from getting onto the housing ladder and leading to strong demand for rental property.

"Unfortunately, Scotland bucked this positive trend showing a steady decrease in rental yields over the year. This is due to the continuing growth in property prices in this region and rental yields should stabilise as the market slows down over the coming year.

"Provided the economy remains stable and we don’t experience any sudden increases in the base rate, we firmly believe that 2006 will see a vibrant buy-to-let market across the UK with growth driven by increased consumer confidence and high demand."

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