According to the latest data from Fleet Mortgages, the total average rental yield for England and Wales has jumped 1% to 7.6% compared to this time last year. This follows an even bigger jump from the first quarter of this year, where yields reached 7.1%.
The simple reason behind this surge? High demand and limited supply! More people are looking for rental homes than ever before, while the number of available properties remains low. This means landlords have the upper hand, able to charge more for their properties.
Where are the Highest Yields?
Across the country, every region is seeing rental yields climb, with the North East leading the pack with a whopping double-digit yield!
Top 5 Regions for Rental Yields:
- North East: 10%
- North West: 8.2%
- Wales: 8.1%
- West Midlands: 7.9%
- Yorkshire & Humberside: 7.6%
Even London, the South East, East Anglia, and the South West, which traditionally have lower yields, have seen their average rental returns increase both year-on-year and quarter-on-quarter.
What does this mean for landlords?
The good news is that this strong rental market isn’t expected to disappear any time soon. Experts believe that yields will remain high until there are more homes available to meet the growing demand.
But, landlords also need to be aware of the challenges:
- Rising Interest Rates: Borrowing costs are on the rise, which means your mortgage payments could be higher.
- Refurbishment Costs: Maintaining your property to meet high standards is essential to attract tenants, and this can be expensive.
Steve Cox, Chief Commercial Officer at Fleet Mortgages, said: “The trends we are seeing in the buy-to-let sector are clear. The supply and demand imbalance is pushing yields higher, and this is unlikely to change quickly. However, landlords need to be prepared for the increased costs associated with higher interest rates and maintaining their properties.”