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Buy-to-let's energetic performance

24th June 2008 | back to article listings BACK    print this article PRINT

When it comes to buy-to-let, few areas of property investment have come under such fire in recent times. Yet for all the suggestions that the market is doomed, the idea that investors should cut and run in response to the present dip in the property sector has been widely ignored.

Although it may be the case that some unwise investments have hit the wall, particularly those based on the notion of a quick profit, those who have solid portfolios with long-term plans and firm foundations have good reason, it seems, to smile.

Cause for this has come from Paragon Mortgages, whose latest figures confirm that the oft-reported trend of rents rising as the residential buyer market declines is still continuing.

In its latest set of figures, the average rental yield in May was 6.4 per cent, with the firm's buy-to-let index also showing that over the past year the average rent has risen by 12 per cent. All this could be said to make up for a less impressive rise in property values in recent times, with the annual figure of 7.5 per cent increase concealing the finding that such values have only gone up by 0.2 per cent in the last six months.

Reflecting on the findings, Paragon's managing director John Heron said: "Strong tenant demand has been pushing up rents, allowing landlords to achieve better yields than they've seen for more than two years."

For this reason it may come as little surprise that buy-to-let investing is still going on. In Southampton at the weekend, for instance, it was reported by homemove.co.uk that an investor has spent £110 million on buying up a block of 169 flats to rent out. Delph Property Group, the firm behind the transaction, was reported as saying it believed the lettings market in the city is on course to carry on performing well.

While demand for lettings is increasing, it may also be the case that some are getting choosy about where they live on grounds such as the energy performance of their rental property. This is an area landlords will have to pay attention to as from October 1st they will need to supply an energy performance certificate (EPC) identical to those in home information packs to any new tenants they take on.

Issuing a reminder of this, the National Approved Letting Scheme's chair Caroline Pickering said the new rules will spell good news for all, rather than being a bureaucratic burden. She stated: "An EPC provides the tenant with a clear indication of the energy efficiency of their accommodation which can only be a selling point for prospective tenants. It is a 'win-win' situation for tenants, landlords and lettings agents."

So while buy-to-let is offering higher rents for landlords now, those whose properties show up well on their EPCs could enjoy the prospect of doing even better from the autumn.

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/4243.html. Alternatively, please see our full press release archive.

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