Landlords rewarded by rent rises as sales fall

British landlords have made an average of 34,500 in rental income in 2007, according to buy-to-let mortgage provider Paragon.

Rents are up by 6 per cent over the past quarter and 17 per cent in the past 12 months, the research found.

Meanwhile, a survey by Bradford & Bingley reported that yields have increased by 6.02 per cent in the East Midlands in the past year and by 6.01 per cent in Scotland. The South-west, Yorkshire and the North-west achieved the best results during the year, the lender found, with rental yields worth just under 7 per cent of property value.

A third of the landlords surveyed said rents were higher than 12 months ago, but over half stated there had been no change. Some 86 per cent plan to increase their portfolios or leave them as they are in 2008, according to Bradford & Bingley, with yields holding steady nationwide at an average of 5.72 per cent of property value.

Around a third of landlords expect rental yields to rise next year and two-thirds envisage they will remain steady.

Last month, property sales declined at their fastest rate since April 1999, and Jeremy Law at Bradford & Bingley agreed that this will ensure the buy-to-let market continues to prosper.

"The social and demographic trends that have been driving the market are strong, with rental demand remaining robust," he said. "If house prices stagnate or fall, we are likely to see demand for rental properties strengthening, leading to improved rental yields.

"The results from our landlord confidence survey, together with the economic indicators surrounding buy-to-let, reveal that the sector is most definitely here to stay and will remain strong."