With residential property investment proving such a popular and competitive option there are some services in the North of the country which lure investors with yields of up to 15%. However these yields are unlikely to be sustainable, generated as they are by poor quality housing stock where capital growth is marginal, and indeed may be negative where areas become deserted by owner/occupiers. It is important to appreciate the difference between gross yields (frequently referred to by developers and estate agents) and net yields. Gross yields can be misleading because they fail to take into account the landlord's expenses of owning the property, such as insurance, service charges and management fees. In all cases our policy is to refer to net yields which give clients a true picture of the real anticipated return on their money. Net yields on good quality investment property normally fall between 4% and 8% per annum, depending on the nature of the accommodation. We provide a full financial appraisal for each property recommended, showing the net yield after all fees and expenditure. Combined with rising capital values in the years ahead, the investor can reasonably expect income and growth. Furthermore, there is the prospect of improved returns in the long term through introducing an element of borrowing (please see Financing the Purchase). |
, by contrast, focuses only on Cambridge and Exeter's high quality housing stock where demand helps ensure increasing rental values and attractive yields, and where capital growth has outstripped expectations.
