Rental yields stay flat year-on-year with North East reporting strongest growth
Rental yields on residential buy-to-let (BTL) properties across England and Wales have stayed flat year-on-year at 5.6 per cent in Q2, analysis has shown.
Fleet Mortgages’ rental barometer research from Q2 last year showed rental yields in all regions were down as lockdown was imposed in various areas.
However, five out of 10 regions recorded an annual increase. This compares to the same quarter last year where all regions reported an annual decline.
These regions that reported an uptick include North East, Yorkshire and Humberside, the East Midlands, the South West and East Anglia.
The largest year-on-year changes were recorded in Yorkshire and Humberside, with a rental yield growth of 1.1 per cent to 7.2 per cent. This was followed by the East Midlands, which reported a growth of one per cent to 5.5 per cent average rental yield, and East Anglia which went from 5.1 per cent to 6.1 per cent.
Regions with the highest average rental yields included the North East with eight per cent, Yorkshire and Humberside and the North West with 6.9 per cent. These were the same top three regions in Q1.
Fleet noted that the data showed continuing strong rental yield across England and Wales, and said rental yields were becoming more centralised as regions with lower yields improved and those with higher yields mellowed.
Steve Cox, chief commercial officer at Fleet Mortgages, said: “We’re starting to see a degree of stability in these with a number of regions which have posted close to double-digital rental yields slipping back slightly, and those who were at the other end of the scale starting to creep up.”
Greater London was an exception to the upward trends, as average yields in the region fell by 0.2 per cent to 4.7 per cent.
Cox said this was because the market was complex and “very different” to other regional markets and indicated it chould not be used as a benchmark.
He continued: “The positives for landlords are the still strong yields being achieved pretty much right across the board, and certainly in the North we can see tenant demand continuing to outstrip supply. Indeed, in other regions we can view the ongoing strength of demand, as tenants seek to move to properties which may be more in keeping with a post-pandemic work/life balance.”
He said that the private rented sector could benefit from greater supply to meet heightened tenant demand but landlords were adding properties to their portfolio to meet this gap and buy-to-let investment remained “undiminished”.