BUY-TO-LET yields grew healthily in the third quarter, data from Mortgages for Business revealed yesterday, driven up by falling property prices.
Yields on so-called “vanilla” buy-to-let – buying houses and flats to rent them to others – grew from 6.1 per cent in the second quarter to 6.7 per cent in the third, the data showed.
The yield is the amount earned through renting the property as a proportion of its asset value.
The return from buying a house and letting it out to multiple occupants also rose, from 9.2 per cent in the second quarter to a full 11.1 per cent in the third quarter.
And yields on “multi-unit freehold block” property – blocks of flats and similar properties – grew from 7.5 per cent between April and June to 8.8 per cent between July and September – just as the average property value in these deals tumbled a third from £442,223 to £297,938.
The only fall was in semi-commercial property, where gross yields slipped from 7.4 per cent to 7.1 per cent.