Buy To Let Yields Shrink

Buy-to-let yields shrink according to the latest Your-Move index. There are a number of factors which are impacting returns to buy-to-let investors including increased stamp duty tax on the purchase of second properties, increased taxation on property related income and lack of rental growth against generally increased housing prices.

MortgageIntroducer reports:

Typical yields now stand at 4.9%, with the best being in the North East, (5.2%) North West (5.0%) and Wales (4.7%) and the worst in London, (3.2%) the South West (3.3%) and the South East (3.4%).

This is despite UK rents rising year-on-year – as they increased by 4.3% in Wales, 3.6% in the South East and 3.3% in the East of England.

Original article available here: http://www.mortgageintroducer.com/buy-let-yields-shrink-year-year/#.WakefNOGNo4

In addition to the above reasons, lenders are taking an increasingly firm line on buy-to-let with most high street banks increasing their interest cover to 145% from traditionally 125%, further signs that lenders are bracing themselves for increased pressure from the sector, and potentially a further indicator that the market believes that there will be a price adjustment in the next 12-18 months.

There are encouraging signs for buy-to-let investors in the North-West of the UK, and the North-East, however, the areas which have traditionally been dominant in terms of leading the growth have remained fairly stagnant or are experiencing reductions.

Buy-to-let investors have increasingly found themselves under pressure, with less availability of debt facilities from the cheaper high street banks and more restrictive terms when lending is agreed.

Matt Lenzie Director at Hertfordshire Business Funding said; “The government has attacked buy-to-let investors from a number of angles, unfortunately these attacks are beginning to impact returns which investors are experiencing.

The tax changes to the treatment of interest charges being deductible against income will inevitably begin to bite with investors with low yields being impacted first. This will lead to some investors finding themselves with negative yields.”

Hertfordshire Business Funding specialise in Buy-To-Let mortgages, we work with a wide range of commercial mortgage providers, and are a specialist commercial mortgage broker, contact us today to book a free initial consultation with a member of our team.

 

from Hertfordshire Business Funding https://www.hertfordshirebusinessfunding.com/buy-to-let-yields-shrink/
via https://www.hertfordshirebusinessfunding.com