Rental yield stats show 'significant regional shift'

by Daniel Jones

Rental yields are highest in the north-west of England, according to major new survey of the buy-to-let sector in the UK. Research from lender Paragon shows a "significant regional shift" in the rental yields achieved by landlords across the UK.

The north of England performed the best, with the north-west and north-east seeing returns of 6.6 per cent and 6.5 per cent respectively in the first quarter of 2012. Yields in the south-west were 6.4 per cent, while the east of England produced returns of 6.3 per cent.

Central London, where rents are highest, produced yields of 5.9 per cent for landlords. Scotland was bottom of the table, although returns were still a respectable 5.5 per cent.

John Heron, director of Paragon Mortgages, said: "The rental yield figure is important for landlords, as it gives a good indication of how well a property, and in a wider sense, a portfolio is performing.

"We have seen another interesting shift in the regions taking the top spots, with a more distinct north/south divide in Q1 with the north outperforming their southern counterparts."

With tenant demand continuing to fluctuate, he predicts further shifts in the rental yield table over the coming months.

Average rental yields were 6.1 per cent last year, according to BM Solutions, another buy-to-let lender. It recently revealed that monthly rents rose 4.8 per cent over the year, up to £716 in 2011 from £682 in 2010.

It also highlighted a north/south divide, with rental yields in London at 4.8 per cent, while those in the north stood at seven per cent.

However, property owners in London looking to rent a room out to visitors over the summer recently learned that Olympic boroughs are producing the greatest returns.  

Average weekly rents in Olympic boroughs, including Barking and Dagenham, Greenwich, Hackney, Newham, Tower Hamlets and Waltham Forest, now stand at £143, 14 per cent higher than at the end of 2011. On the other hand, average weekly rents in non-Olympic boroughs fell four per cent over the same period.

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Published on: April 17, 2012

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