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Buy-to-let prices rise and rents stabilise

Wednesday 17th June 2009

Average rental yields for buy-to-let property owners stabilised last month reaching £696 per month, it has been claimed.

According to new research from smartlandlord.co.uk, house price rises generally cause rental yields to fall, but they remain 0.3 per cent higher than they were a year ago.

However, the organisation states that property prices fell by 14 per cent year-on-year and as a result total returns on property bought in 2008 remain negative.

Smartlandlord.co.uk has also warned buy-to-let property investors to be cautious as 7.8 per cent of tenants referenced in May were unemployed and 7.7 per cent were self employed.

Keshav Thukaram, managing director of the organisation, said: "Even very experienced landlords need to exercise caution in the current environment.

"This is the perfect time to snap up bargain properties that over the long term will yield great returns," he added.

However, perhaps it should be tenants that are more concerned as the number of evictions has risen sharply in recent times.

"What we're seeing already is a steep rise in the number of tenants, entirely blameless individuals, who are becoming homeless because their landlords can't pay their mortgage" said Shelter chief executive Adam Sampson.

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Posted By Howard Michaels on Wednesday 17th June 2009 18:21:48

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If a mortgage is a legal buy-to-let and the tenant has been paying and continues to pay the rent fully and on time, the tenant cannot be evicted if the landlord defaults on the mortgage payments. The mortgagee is bound by the terms of the lease and can only obtain possession at the time and in the manner available to the defaulting landlord. I am sure Adam Sampson of Shelter is well aware of this. Not making this clear is detrimental to the letting market and to the peace of mind of existing and potential tenants.

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