Buy-to-let yields may be on the rise as the cost of living crisis drives up rents and depresses house prices but landlords face myriad of higher costs and taxes – knowing where to invest has never been so important.
Average gross yields will increase from 4.3pc to 4.9pc by the end of 2024, according to Capital Economics, a research firm. This is because rising interest rates and mortgage costs will lock more first-time buyers out of the housing ladder, pushing up demand and rent prices. At the same time, Capital Economics expects house prices to fall by 5pc over the next two years.
Rents will be boosted because before the pandemic, they grew at a slower rate than wages. This has meant here is headroom for rents to rise before they become unaffordable. The current trajectory of wage growth should allow rents to increases between 5pc and 6pc this year, Capital Economics said.
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