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Buy-to-let yields rise

The downward trend of buy-to-let yields has finally halted,says Paragon Mortgages.

Its buy-to-let index for April shows demand for properties from homebuyers has slackened, giving landlords the chance to buy more cheaply.

Yields rose to 7.99 per cent last month after steadily dropping in 2001 and 2002 to a low of 7.91 per cent in January.

Paragon Mortgages says, over the 15 months to January, prices paid by landlords for rental properties rose by 30 per cent in line with house price inflation. But, as demand from homebuyers slackened over the last month, landlords are getting “keener” deals, with an average £109,424 paid in March.

Annual rental incomes rose by 2.48 per cent over the year, peaking at nearly £9,200 in September 2002 and then becoming relatively stable at £8,745 last month.

Paragon also reveals a North-South divide in rental yields and property values, with the highest yields in the North where properties are cheapest.

Terraced properties are shown to be the best type of investment.

Managing director John Heron says: “With the recent cooling of the property boom and more properties coming on to the market, landlords are currently able to negotiate excellent deals on properties. They are showing no signs of cutting back their investment in property.”

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