Yields work two ways of course

City centre landlords are cashing in as surging tenant demand means yields have jumped this year.

So far in 2021, the average investor purchasing a buy-to-let in a city achieved a gross yield of 5.3pc, according to Hamptons estate agents. This was boost of 0.6 percentage points from 2020, when returns slumped in the wake of the pandemic.

This being – or at least could be – neatly explained by capital values having declined by the necessary amount. Yield is, after all, rent as a percentage of that capital value……falling prices not being the usual background to people “cashing in”.

7 thoughts on “Yields work two ways of course”

  1. I think potential tax and regulation changes are leading to buy-to-let investors demanding a risk premium. I can see a future in the next decade where you aren’t allowed to let a house unless you’ve installed a £20K heat pump, or evict a non-paying tenant without a 12 month “consultation period”. I could afford to buy a property to rent out but at 5.3% gross I wouldn’t go anywhere near.

  2. And net? And what recent legal changes have made B-T-L uniquely onerous for the non-corporate landlord?

  3. I’m not convinced city centre property (domestic or commercial) is a great investment at the moment,

  4. As a landlord in the top 1% of landlords, I can say that many accidental landlords are selling up. As a professional landlord we are buying them up. We use return on investment rather than yield and we have had no complaints at all about the current state of the market, even with the extra costs due to regulation. In fact we are able to cope with them unlike the accidental landlords who are finding it too much. One of the few times I welcome bureaucracy. 🙂

  5. @SBML Often the way though, isn’t it? Incumbents promoting regulation knowing it’s a barrier to entry and all that.

  6. Of course, not many people find themselves “accidentally” running a steel mill or textile factory or supermarket or dry-cleaners or electrical distribution grid. Can well believe that the rental property market has quite extraordinary levels of amateurism compared to the rest of the economy.

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