The average capital asset value of houses and flats in the private rented sector remained stable during the first quarter of 2004, according to data from the Association of Residential Letting Agents.
The Arla buy-to-let index remained at 100 for cash purposes of buy-to-let properties and 100.1 for property investment relying on a mortgage.
The index, set up in September 2002, takes account of capital appreciation and includes yield, rent and void period data from almost 500 letting offices run by Arla members.
The projected annual rate of return over five years on a cash purchase of buy-to-let property is down by 2 per cent to 11.17 per cent for the first quarter of 2004 from 11.39 per cent in the final quarter of last year.
President Robert Jordan says investors should remember that yields do not reflect average rents received and will always be seen to fall if house prices continue to rise.
Jordan says: “Anyone who tries to report that the buy-to-let market and the private rented sector is unstable is not reading the figures correctly. The market remains stable and, as our recent investor survey shows, the average investor landlord is expecting to hold their property investments for between 10 and 20 years.
“This shows a full understanding of the buy-to-let market and the contra-cyclical nature of house price inflation and rental demand.”