Average total returns on investment within the buy-to-let sector have levelled out at 21% for two months in a row, according to research published yesterday
The Paragon Mortgages Buy-to-Let Index reveals the average buy-to-let landlord can now expect a return of £29,083 on their initial investment in a single property made up of £19,480 in capital appreciation and £9,603 in rental income on a property worth £137,849 when purchased last year.
John Heron, managing director at Paragon Mortgages, says the figures show the total returns generated by landlords are still healthy with northern and western parts of the country doing particularly well.
“Landlords’ overall returns seem to have stabilised at something over 20% annually, a very respectable return when compared with other forms of investment, such as the stock market, bonds or a bank or building society deposit.
"Of course, to achieve healthy returns such as these landlords need to treat residential property investment as a long term business, purchasing properties only in response to identified tenant demand and managing their portfolios in a serious, professional fashion. For landlords who adopt the right approach, there’s a more than decent return to be made,” he says.
Across the UK rental incomes rose slightly (0.03%) adding to the 1.67% rise seen in May bringing, says the Paragon, rents to their highest ever level. Average rents are now 9.7% higher than they were a year ago when the average rental income was just £9,603.
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