A recent statement issued by a mortgage lender, reports that its Buy to let Index is now showing a drop in yields for landlords owning standard buy-to-let properties.

The firm says that gross yields for these properties have fallen by .6 % since the beginning of this year. In the first quarter of 2014 the yield stood at 6.4%, it fell to 6.3% in the second quarter and now stands at an all time low of 5.9%.

David Whittaker, managing director of the lender, comments: “Rents on the plainest buy-to-let properties have not kept pace with rapid price rises in many areas, suppressing average yields.  This illustrates two key points for landlords – location matters – and the simplest investments are not always the most lucrative.”

However other types of properties such as multi-unit freehold blocks, recorded a gross yield in the third quarter as high as 8.6%.

Multiple occupation properties gross yields fell slightly in the same quarter to 8.9%, but this is still 3% higher than vanilla/standard buy-to - let properties. at 8.9%

Whittaker added:  “Landlords with multiple tenants at each property can earn a better yield by providing what people need – often just a room rather than a whole flat.  This must be done responsibly, for example houses in multiple occupation often require a licence from the appropriate local authority, while landlords will also need a specialist mortgage product for more complex property types.

“However, if those hurdles are met, landlords can earn not just a higher, but often a more reliable return as part of a diversified investment.”