Insurance News Archive

Interest rates pushing landlords to sell up

Pressure through rising interest rates and falling rental and total yields are convincing more landlords to sell up.

A Royal Institution of Chartered Surveyors (Rics) survey shows that during the second quarter of 2007, more than five per cent of landlords chose not to hold onto their property when a tenant's lease expired.

This is the highest percentage of landlords dropping out in two years, with a four per cent rate of sales more typical in recent months.

Kelvin Davidson, property economist at Capital Economics, told Landlord Expert: "Falling yields set against rising interest rates can only have squeezed landlords' operating margins even further, making residential property less enticing for new investors."

With property price inflation still out-performing rental growth despite high tenant demand, gross yields in the buy-to-let market are falling at their fastest rate for three years.

And with some economists predicting the Bank of England will set a six per cent rate of interest before the end of the year in an attempt to curb inflation, the attractiveness of investments and their potential yields will come under further pressure and scrutiny.

30 May 2007