More investors now valuing rental yields over capital gains

Inves tors across the UK have traditionally sought out impressive capital gains, largely thanks to the fact that over the years and decades, British property prices have increased fairly quickly. This gives buyers the chance to see a substantial increase on what they’ve spent in a reasonably short period of time.

However, the market always eventually changes, and according to new reports, this is happening with investor sentiment, after it was revealed that a greater number of people are now investing in property for rental yields rather than capital gains.

Fewer people buy homes now than in the past - only around two-thirds of us live in the property we own - and the more favourable rental market has become an attractive option, rather than just the only alternative to being able to afford a home.

This pushed up demand, and investors can increase what they charge tenants as a result of this demand, which means getting a larger income, and a better return on investment overall than could be found with capital gains. Returns of up to eight per cent means that buyers often now see their rental properties as being a real earner for their retirement.

The political uncertainty in the market is helping to push towards rental returns over capital gains again. In the stabler times, people tend towards the excitement of red-hot price rises, rather than the long-term gains that are associated with rental income.

However, at times like the present, where no one is buying homes and ownership levels are falling, people will look towards the stability of money coming in month after month, rather than all at once, and the long-term ability to earn that this brings with it.