Average UK rental yields on the decline

Mortgage lending hits record level for September

More homeowners relying on property for retirement

Luxury homes sector forecast to slow in London

Average UK rental yields on the decline

Rental yields in the UK continued to fall across England (5.69% to 5.54%) and the Greater London area (5.70% to 5.53%), according to Landlord Mortgages. However, the average decline in yields has shown signs of slowing, suggesting that the residential property market is stabilising.

Rental yields in Scotland continue to outperform England and Greater London but have shown a sharp decline over the past quarter.

Lee Grandin, managing director of Landlord Mortgages, comments: “While the rental yields available in Greater London, England and Scotland have fallen quarter on quarter, this is not necessarily a sign of difficulties in the market.  Rather, it can be attributed to continued house price increases and lenders relaxing their minimum rental coverage requirements.  These changes have been a bonus for many property investors as it allows them to purchase properties that they had been forced to ignore in the past.

“ Scotland’s yields have taken a sharper downturn over the last quarter. However this should not be seen as a signal to pull out of the market.  It is an indication that traditionally lower Scottish house prices are starting to catch up with those in England and a sign that investors need to start looking for profitable areas rather than regions. 

“It is important that potential residential property investors are not put off by this news as there are still good opportunities for profit in this market. After all if the lenders are confident of the future of buy-to-let, why shouldn’t we be?”

Mortgage lending hits record level for September

Gross UK mortgage lending hit a new September record of £29.5bn, according to the latest data from the Council of Mortgage Lenders (CML).

Lending fell by 11% on the all-time record reached in August of £33bn, but rose by 7% compared to September 2005 (£27.6bn).

Michael Coogan of CML, comments: "Housing demand and mortgage approvals in May and June this year were particularly strong and this supported the record levels of lending during the summer months. The lower levels of lending in September must be seen against this backdrop. House price growth and mortgage approvals continue to
remain strong, so we should expect to see continued levels of robust lending
over the coming months.

"But with financial markets now expecting a further interest rate rise, we
anticipate a slow down in house sales and mortgage approvals as we move into
2007."

More homeowners relying on property for retirement

Over 7.5m homeowners are relying upon capital growth to bankroll their retirement, rather than saving for the future, according to a new report.

Research by Lincoln Financial Group reveals that more than half of homeowners in the UK see property as their main asset for retirement.

Ian Noble of Lincoln Financial Group, said: "We all know the phrase 'safe as houses', but it appears that many of us are perhaps taking it a bit too literally by relying on our homes to fund our retirement after our pensions.

"Of course it can be difficult building up other savings while paying off your mortgage and also investing in a pension. But it is potentially risky to believe that your home will provide for your retirement if your pension is not sufficient."

Luxury homes sector forecast to slow in London

London's most expensive residential properties (homes that cost more than £5m) are set to appreciate by 12% in 2007 compared with 25% in 2006, according to Knight Frank.

Liam Bailey, head of residential research at Knight Frank, said: "This year's bonus round for bankers, traders and fund managers may be the key as that is the main driver for prime property prices."

The Center for Economics and Business Research expect city bonuses to rise by 8% from 2005's record 7.5bn.