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Rents keep promise

An annual rise of 9.3 per cent in average rent proves buy-to-let is still an attractive investment despite falling house prices and rising mortgage costs.

Paragon’s Buy To Let Index showed that average yields remained stable at 6.4 per cent for the second consecutive month this June, providing a "vital source of stability" for an uncertain housing market.

Rises in UK rent prices had more than offset increased costs for landlords, and have stabilised at an average just short of £1,000 a month.

John Heron, managing director of Paragon Mortgages, said: "Falling house prices are spooking first-time buyers and they are delaying house purchase, with tenant demand at high levels as a result."

High demand would see landlords well placed for further investment.

As expected, average landlord property value slipped again in June, down 1.1 per cent in May. Values have reduced by 3.2 per cent in the past year and now stand at an average of £185,552.

The data also showed that smaller, terraced houses are providing the highest yield for landlords.

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