Buy-to-let rental yields have remained largely flat over the last 12 months, up just 0.1% year-on-year to the end of the first quarter of 2020, according to Sourced Capital.

The peer-to-peer investment platform found that yields have fallen by 0.1% in England, while regionally London has seen an even greater decline with a drop of -0.2%.

However, this hasn’t been the case everywhere with some areas recording rising yields in the last year.

The North East has seen an annual increase of 0.12% and on a local level, Corby has seen an uplift of 0.7% on an annual basis. Charnwood, Newcastle and Exeter have also seen positive growth with a jump of 0.5%.

Harlow in Essex and the Orkney Islands have enjoyed a 0.4% increase, along with Ealing which enjoys the largest increase of all London boroughs.

Strongest yields

Glasgow has recorded a marginal decline on an annual basis, but the city’s current average rental yield of 7.87% remains the strongest in the UK buy-to-let sector.

Inverclyde, West Dunbartonshire, Midlothian and East Ayrshire also remain some of the most profitable pockets, while outside of Scotland, Burnley, Belfast and Blackpool also rank well.

Managing director of Sourced Capital, Stephen Moss, said: “Turning a profit in the buy-to-let sector remains a tough ask with a number of government changes denting profitability and yields remaining largely flat.

“With COVID-19 presenting additional hurdles such as rental arrears and longer void periods, many are now turning to alternative options such as the peer to peer sector for a safer, more hands-off investment.

However, that’s not to say that a buy-to-let property won’t make a great investment should you place your money in the right pockets of the market. Buy-to-let returns are based on fine margins and so an annual increase of 0.7% isn’t as insignificant as it may seem.”

Rental yields in 2020 (quarter one)

North East 5.09%
East Midlands 3.93%
West Midlands 4.03%
North West 4.55%
Wales 3.9%
Yorkshire and The Humber 4.52%
South East 3.71%
Scotland 5.9%
East of England 3.55%
South West 3.78%
Northern Ireland 5.4%
London 4.1%
England 4.1%
United Kingdom 4.8%

Source: Sourced Capital, June 2020