Falling Property Prices mean Bigger Profits for Buy to Let Investors

14 October 2012 Categories: News

Falling Property Prices mean Bigger Profits for Buy to Let Investors

Falling property prices during the second and third quarters of this year have helped to push up the gross yields currently being experienced by buy to let investors and landlords. The inability of property owners to sell to potential owner-occupiers has left a large gap in the market for buy to let investors, and when you add the continual high demand for private rental properties into the equation it seems that investors are making large profits in the form of rental yields.

In fact, research has found that the average rental yield of houses and flats rose from 6.1% in Q2 to 6.7% in Q3. Similarly the rental yields for HMO‘s rose from 9.2% in Q2 to over 11% in Q3.

Managing director of Mortgages for Business, David Whittaker, commented on the positivity of the private rental sector, saying “The owner-occupier market is sinking deeper into the mire and is dragging property prices down with it.

“It’s great news for buy to let investors, who are able to snap up cheaper property, usually at a higher loan to value ratio because lenders are understandably willing to advance more when property prices are lower,”

He then went on to say “It’s a fairly simple equation: suppressed property prices, plus strong demand for rented accommodation, equals higher yields for landlords,”