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I Told You So

Rental Yields Fall

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http://www.in2perspective.com/nr/2006/04/b...yields-fall.jsp

Buy-to-let investors squeezed as yields fall

By Nick Booker, Staff Columnist

Published 21st Apr 2006, (a Friday) at 11:00AM

See also... lee-grandin, landlord-mortgages, rental-yields, buy-to-let

Rental yields in England have fallen from 6.15% to 5.91% between the last quarter of the last year and the beginning of 2006. London yields have fallen by an even greater margin - from 6.58% to 6.07%.

Oh dear oh dear, could that be due to oversupply? :lol::lol::lol::lol::lol:

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http://www.in2perspective.com/nr/2006/04/b...yields-fall.jsp

Buy-to-let investors squeezed as yields fall

By Nick Booker, Staff Columnist

Published 21st Apr 2006, (a Friday) at 11:00AM

See also... lee-grandin, landlord-mortgages, rental-yields, buy-to-let

Rental yields in England have fallen from 6.15% to 5.91% between the last quarter of the last year and the beginning of 2006. London yields have fallen by an even greater margin - from 6.58% to 6.07%.

Oh dear oh dear, could that be due to oversupply? :lol::lol::lol::lol::lol:

Great post!

"London has typically recorded the lowest yield figures due to the high cost of property but has for the second consecutive quarter outshone England, despite recording a fall this quarter.

So the low yields in London are better than the yields elsewhere? :lol:

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Great post!

"London has typically recorded the lowest yield figures due to the high cost of property but has for the second consecutive quarter outshone England, despite recording a fall this quarter.

So the low yields in London are better than the yields elsewhere? :lol:

:lol::lol:

Suddenly the yield on my property in Australia is looking good! No need to raise the rents. :)

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[Oh dear oh dear, could that be due to oversupply?

Possibly, or maybe due to the fact that rents that provide an adequate return are beyond the reach of those who need to rent... ie, the same people who can't afford to buy.

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http://www.in2perspective.com/nr/2006/04/b...yields-fall.jsp

Buy-to-let investors squeezed as yields fall

By Nick Booker, Staff Columnist

Published 21st Apr 2006, (a Friday) at 11:00AM

See also... lee-grandin, landlord-mortgages, rental-yields, buy-to-let

Rental yields in England have fallen from 6.15% to 5.91% between the last quarter of the last year and the beginning of 2006. London yields have fallen by an even greater margin - from 6.58% to 6.07%.

Oh dear oh dear, could that be due to oversupply? :lol::lol::lol::lol::lol:

Or could it be due to HPI?

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Great post!

"London has typically recorded the lowest yield figures due to the high cost of property but has for the second consecutive quarter outshone England, despite recording a fall this quarter.

So the low yields in London are better than the yields elsewhere? :lol:

I've done a fair amount of comparison of rental yields in various places. Getting over 5% gross yield seems to be difficult in most places. It seems quite easy to get 6% or more in London. Try two bed flats in Golder's Green. I think there was something in Tower Hamlets that, should my methodolgy be correct, gave about 7% yield. These figures were based upon looking at the cheapest houses/flats for sale of various types and then the cheapest rentals for the same type of properties. I don't know how I would calculate yields for more expensive properties just by looking at websites as it would be difficult to make the comparison between "like" properties.

Having moved from London to Leicester last year, rents are a lot higher in London. My rent halved. Exactly. For a similar property.

Billy Shears

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Doesn't this yield amount only affect BTL's happening today. I'm sure it won't bother TTRTR if he bought his years ago.

Question (because I'm not sure about the exact way a yield is calculated) Would a yield have to fall into -ve percentage to mean the landlord would have to pay extra (+ the rent) to meet his mortgage costs?

If this is the case, would it be bothering them that much until then?

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Doesn't this yield amount only affect BTL's happening today. I'm sure it won't bother TTRTR if he bought his years ago.

Sure, if you believe that millions of pounds of assets returning 5% is a good yield when inflation is closer to 10% and commodities are exploding.

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Question (because I'm not sure about the exact way a yield is calculated) Would a yield have to fall into -ve percentage to mean the landlord would have to pay extra (+ the rent) to meet his mortgage costs?

If this is the case, would it be bothering them that much until then?

nope - you could have a 24% yield, but if the costs of borrowing were 25% (on a notional 100% LTV for simplicity's sake) you would be cashflow negative.

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Doesn't this yield amount only affect BTL's happening today. I'm sure it won't bother TTRTR if he bought his years ago.

Question (because I'm not sure about the exact way a yield is calculated) Would a yield have to fall into -ve percentage to mean the landlord would have to pay extra (+ the rent) to meet his mortgage costs?

If this is the case, would it be bothering them that much until then?

Maybe, but there's a "you can't have it both ways" problem. If a landlord is uninterested in capital appreciation, then perhaps they can view the rent as a return on their original investment. But as far as I can see, it's normal to calculate the return based on the current value of the asset.

Think about putting £1000 into a high interest account, perhaps giving 7% return. After two years, if the interest was paid yearly (too lazy to do it monthly), then the amount would have become £1144.90 after two years. If you then received a letter through the post saying that the bank had dropped its interest rate to 6.11407109791248143942%, then would you think "well, I'm still getting 7% return on my original investment"? Or would you feel that the return had gone down? I'd feel that it had gone down.

So, where the "you can't have it both ways" argument comes in is: if capital appreciation is an important part of the "return" of a BTL investment, then the yields should be calculated on the current "value" of the investment, the same as for cash. But if they aren't an important part of the investment, then yields being so low should be a danger signal of an overpriced market. I.e. you can't say that yields for many are good because they bought some time ago at lower prices, but that new BTLers should consider capital appreciation more important than yield.

Billy Shears

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http://www.in2perspective.com/nr/2006/04/b...yields-fall.jsp

Buy-to-let investors squeezed as yields fall

By Nick Booker, Staff Columnist

Published 21st Apr 2006, (a Friday) at 11:00AM

See also... lee-grandin, landlord-mortgages, rental-yields, buy-to-let

Rental yields in England have fallen from 6.15% to 5.91% between the last quarter of the last year and the beginning of 2006. London yields have fallen by an even greater margin - from 6.58% to 6.07%.

Oh dear oh dear, could that be due to oversupply? :lol::lol::lol::lol::lol:

oversupply, which country do you come from?

Personally I'd be wary of very high yeilds, it implies risk ie voids etc. Yeild compression can represent the markets opinion of the assets value. I would be interested to hear what TTRTR's minimum yeild requirements are, I guestimate 6.5ish? Some research I did in manchester had yeilds as low as 4.5%, i.e loss making, on some new city centre BTL's. A sign of the amatuer BTL, happy to expand their property interests even if it means supporting it themselves?

Edited by bob monkhouse

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You were all so quick to shout falling prices when yields were reported to be rising by Paragon.

Now prices are rising again, I can't hear anyone shouting the connection with yields.

:lol::lol::lol:

Its simple - yields go lower as house prices go higher!

With sydicated SIPPS etc.. you may see yields go even lower as they can buy for 40% off!

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You were all so quick to shout falling prices when yields were reported to be rising by Paragon.

Now prices are rising again, I can't hear anyone shouting the connection with yields.

:lol::lol::lol:

drama.jpg

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You were all so quick to shout falling prices when yields were reported to be rising by Paragon.

Now prices are rising again, I can't hear anyone shouting the connection with yields.

:lol::lol::lol:

so doesn't that imply that property is a worse investment now or are we in it for capital gain again?

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It implies that it's a worse investment for you, who failed to buy when you had the chance & now have to pay more.

f@ck me. so what your saying is...now is not a good time to buy.

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It implies that it's a worse investment for you, who failed to buy when you had the chance & now have to pay more.

or that i was wise and took my profit (although i dont like to use the term) just before the top - always leave something for the next man!

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f@ck me. so what your saying is...now is not a good time to buy.

Now IS a good time to buy. The longer you take (assuming you aren't on the property ladder at the moment), the harder it will be. There will be no crash end of story!

As for TTRTT, he has the experience and skills to achieve 7%+ yeilds due to the kind of properties he buys and the renovations/conversions.It probably not a good time for a lazy BTL'er buying rediculously priced new build flats, but then it never has been!

Do yourself a favour and look to buy for an old property that needs modernisation and you will be far happier in a years time.Well, after youve finished all the work. But it will be worth it :D

Edited by enworb

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Only time will tell whether now is a good time to buy. Only time has ever told.

Very philosophical.

I prefer to look at long-term indicators of value, and right now they're screaming get out of property.

Anyways, for all the people who don't understand the TTRTR yields argument, it goes something like this:

Prices go up, BTL landlord wins, but then sometimes yields go up, which means landlord wins.

When prices are going down, that means the yields are going up, so the landlord wins, and when the yields go down that means the prices have gone up, so the landlord wins.

Heads I win, tails you lose. :D:D:D

Edited by BandWagon

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http://business.scotsman.com/finance.cfm?id=605402006

Scotland bucks rent yield trend

SCOTLAND has continued to buck a
gloomy trend in rental yields
. Yields on buy-to-let property north of the Border rose to 6.58 per cent in the first quarter of 2006, from 6.27 per cent in the previous three months, according to specialist broker Landlord Mortgages.
Rental yields in England, however, fell to 5.91 per cent from 6.15 per cent - the second lowest performance since the index began. London followed the negative trend, showing a fall to 6.07 per cent from 6.58 per cent.
This article:
http://business.scotsman.com/finance.cfm?id=605402006' rel="external nofollow"> http://business.scotsman.com/finance.cfm?id=605402006' rel="external nofollow">
Last updated: 22-Apr-06 01:57 BST

As rent yields begin to fall in England and rise in Scotland it suggests that reality has yet to hit North of the Border?

TTRTR should have seen the "sell" signal before this news leaked as the last remaining amateur landlords are not going to be comforted by this negative news.

It does underline the problem faced by landlords in high prices housing areas: you can only charge by way of rent what the market can bear. As the economy falters rents falter along with it.

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Now IS a good time to buy. The longer you take (assuming you aren't on the property ladder at the moment), the harder it will be. There will be no crash end of story!

If you say so mate.

You used an exclamation mark so it must be true.

Hang on. I meant...it must be true! :lol:

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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