The yield from purchasing properties for rental purposes is on the rise, with analysis from professional lending institution Octane Capital indicating an increase from an average of 4.9% over the past two years to 5.8%.

Over the last two years, rental income has increased by 19%, now totaling £15,144 per year. Meanwhile, initial startup costs associated with property rental have decreased by 17%, from £12,037 in 2021-22 to £9,952 today.

However, due to the rise in mortgage interest rates, operational costs have increased by 18%, reaching £15,592 per year.

Jonathan Samuel, CEO of Octane Capital, commented: "Landlords have benefited in recent years from healthy levels of rental income. While capital appreciation of properties may have slowed, their investments continue to yield significant returns even in the current volatile market environment."

propertywire.com

"Of course, higher operational costs, particularly the rise in mortgage interest rates, have constrained overall net returns. However, in the current economic climate and amid the uncertainty experienced in the property market in recent months, the decrease in net profit is relatively modest."

"There are still many opportunities for investors purchasing properties for rental purposes to reduce borrowing costs, and utilizing professional lending institutions is the best way to access these opportunities."

"It's worth noting that the government's plans to digitize taxation may add additional costs. Although initial startup costs are around £350 and ongoing costs are approximately £110, this is unlikely to dampen investment interest."

"While the government also hopes to attract more landlords to exit the industry by reducing capital gains tax, our research indicates that despite a slight decline in profits, this remains a profitable endeavor."

The main negative factor for investors is a 6% annual decline in capital appreciation, falling to £15,728 per year. This results in a 6% year-on-year decrease in returns, amounting to £15,280 per year, which is lower than the £16,285 per year from capital appreciation and rental income (taking into account ongoing costs associated with property investment for rental purposes).