Wales is the latest ‘hot spot’ for residential and BTL property investors, according to Paragon Mortgages’ latest Buy-to-Let Index…

Rents are up by 33 per cent over the past quarter and property prices by 18 per cent. Rental yields are also following a positive trend, with Wales the only region of the country where yields exceed 7 per cent, reports the Mortgage Finance Gazette. 

On top of that, this month Wales stands in second position in terms of total return, generating an average of 25.6 per cent - compared with an average of 12.9 per cent for England and Wales as a whole.

John Heron, managing director of Paragon Mortgages, said:

“Rents are rising strongly in Wales, but so are property values, although to a slightly lesser extent. On the back of that, investors have been enjoying steady rises in rental yields over the past few months, up from 6.3 per cent to 7.1 per cent in one quarter. With a positive economic backdrop underpinning growth in tenant demand, it is not surprising that Wales is the country’s top performer in terms of yield, and the only region to generate average rental yields in excess of 7 per cent.”

Wales yields ‘twice the national average return’

In March, the average annual rent achieved by landlords in Wales was £11,251, up 32.7 per cent on the figure in December (£8,480), on a typical property worth £158,239, up 17.5 per cent on December’s figure (£134,727).

An investor who bought a property one year ago will have generated an average total return of 25.6 per cent or £34,079 on a property worth £133,297 in March 2006.

John Heron concludes:

“The astute landlord who invested in buy-to-let in Wales this time last year will have achieved almost twice the national average total return. While the national picture remains strong, residential property investment looks particularly attractive in Wales. Trends in the local economy are very positive, creating new jobs and causing an influx of workers into the area, which in turn fuels tenant demand".