Paragon Upbeat on Buy To Let Market

Rental yields for buy to let mortgage holders remain strong, specialist lender Paragon has said.

The firm released new figures yesterday, showing that the average investor recouped 6.4 percent in June - identical to May's level. Moreover, average UK rents are now approaching £1,000 per month, and stand around ten percent above last year's level.

Regionally, the highest average yields for buy to let mortgages were found in Wales (7.6 percent) and the north of England (7.4 percent). Strengthening demand for rental property due to potential homeowners being put off buying in the housing slowdown is thought to be behind the rising prices.

Commenting on the data, Paragon managing director John Heron said: "For the vast majority of landlords, a slow housing market is nothing new. They recognise the counter-cyclical nature of buy-to-let and many landlords have held property through previous housing cycles. Falling prices are spooking first-time buyers and they are delaying house purchase, with tenant demand at high levels as a result.

The lender also foresees no return to the last recession, Mr Heron claimed. "During the downturn of the early 1990s we witnessed mass possessions because there was little alternative to house purchase and young buyers had borrowed above their means," he said.

"Today's modern and vibrant private rented sector provides people with a viable alternative to owner occupation and buy-to-let provides housing for young people who would otherwise have little choice but to buy and be financially stretched."