More and more properties have been coming onto the market since the beginning of the year but demand has slackened, allowing professional landlords to secure increasingly attractive deals, according to Paragon. As a result, yields rose slightly to 7.99% last month, from a low of 7.91% in January. This may mark the end of a long period of declining yields – which have fallen steadily from 10.02% in November 2001 to 9.57% a year ago to 7.91% in January.
Over the same period, the prices paid by landlords for rental properties have risen steadily - in line with house price inflation - by 30% over the 15 months to January 2003. Whilst residential property prices generally have continued to rise, landlords are increasingly achieving keener prices, the average for new purchases in March being £109,424.
Commenting on the results, John Heron, managing director of Paragon Mortgages said: “The inexorable rise of property values has meant that we have seen a steady decline in rental yields over 2002; however, landlords have made a substantial capital gain on their investment properties over this time. With the recent cooling of the property boom and more properties coming onto the market, landlords are currently able to negotiate excellent deals on properties. They are showing no signs of cutting back their investment in property.”