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Returns rocket for buy-to-let landlords

Paragon Mortgages claims that landlords made total annual returns of over 31 per cent last year.

Its buy-to-let index says landlords made a total return of 38,560 on an average property bought 12 months ago at 123,372. This compared with a total return of 20 per cent in 2003.

Despite a per cent fall in property values nationally, rental property prices were 24 per cent higher last year than 2003.

Average landlord rental incomes rose by 13 per cent from 9,098 to 10,297 in December 2004. Rents increased in six out of 10 regions, with Wales and the North seeing the highest rises, by 8 per cent and 7 per cent respectively.

House prices paid by landlords in December fell slightly to an average of 152,834, a decrease of 0.3 per cent from the previous month.

Average yields ended the year at 6.7 per cent. For the third month in a row, the highest yield was achieved in the South-west at 7.5 per cent on an average property worth 178,446. The lowest-yielding areas were Greater London and East Anglia.

The survey indicates that landlords expect another year of growth, driven by sustained demand and they expect their portfolios to increase by 5 per cent over the year.

Paragon managing director John Heron says: “It has been a good year for landlords and prospects for 2005 are good. The slowdown in the housing market since last summer has fed through into a lower level of activity among speculators and small-scale investors but bigger landlords remain opportunistic buyers, albeit cautious ones.”


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