Falling prices & higher yields

The latest RICS Letting Survey for July has some encouraging figures for landlords and the lettings market. The full study can be viewed here. It's not the easiest study to decipher because it is based on the attitudes of the surveyors that take part. Imagine a hundred surveyors in a room who are then asked do you think yields and rents are going up down or staying the same. The survey then takes the balance. So if out of the 100; fifty surveyors say rents are going up to thirty who say rents are falling; the balance would be +30%. Not the most straightforward but it has been very useful as a forward indicator on the residential letting and investment market.

The latest figures show that surveyors are pretty positive on rental yields with a balance of almost 20% surveyors seeing residential investment yields rise.

This is not unsurprising. With rents continuing to increase and rental demand strong, particularly in London the income side of the investment equation is on the up. House prices on the other hand continue to suffer from weakness. The latest views from respected City figure Neil Woodford Invesco Perpetual's head of investment indicate that he expects house prices to fall over the next couple of years by between 5 & 10%. If that's the case investment yields will continue to strengthen.

For landlords looking for good income producing investments, the current climate looks pretty positive.

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