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Buy-to-let yields slide in 2003

Yields for landlords began to dip in the last few months of 2003, says Paragon Mortgages.

Its buy-to-let index shows that average yields were 7.37 per cent in December, down from 7.49 per cent in November. In December 2002, yields were 8.07 per cent.

Property prices for landlords also fell to £123,372 in December from a peak of £127,329 in October. This price was still 12.03 per cent higher than the £110,120 paid in December 2002.

Paragon says house-price inflation on buy-to-let properties has fallen behind the housing market as a whole. Total returns for landlords in 2003 were over 20 per cent, as an average property bought for £110,120 a year ago realised a return of £22,137.

Managing director John Heron says: “Landlords tend to be astute property purchasers and they take advantage of any dips in prices to achieve a good deal and make shrewd investments. As a result, we are starting to see a lower rate of inflation on landlord property values than in the market as a whole. It has been a good year for landlords. Prospects for 2004 are good as well.”

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