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?”