Average rental yields across England and Wales have increased from 6.7% a year ago to 7.1% in the first quarter of 2024, the latest figures from Fleet Mortgages reveal.
The lender’s rental snapshot shows annual increases in yields across almost all regions.
The North East is the only area of England and Wales to see a dip in yields, down by 0.4 percentage points year on year 8.8% to 8.4%.
But despite the fall it remained the area with the second highest yield, after the top performer, Yorkshire and Humberside with a yield of 8.5%.
Yorkshire and Humberside also saw the strongest annual growth, up by 1.3 percentage points from 7.2% a year earlier.
The North West had the third highest yield at 7.9%, up from 7.3% last year.
Fleet’s findings show the north-south divide as clearly as ever with northern regions taking the top three spots for yields, followed by the midlands and Wales with mid-table yields and southern regions at the bottom.
London had the lowest yield at 5.9%, up from 5.3% a year ago.
Fleet’s average loan size increased from £175,000 in the final quarter of 2023 to £183,000 last quarter and average rental cover rose from 170% to 172%.
Fleet Mortgages chief commercial officer Steve Cox says: “Clearly, landlord borrowers had a difficult 2023 in terms of mortgage affordability and costs, but there is further positive news in terms of falling mortgage product rates, and the anticipation is we’ll see this continue to track downwards.
“Our intention at Fleet, as always, is to get our range close to the 5% mark as we’re acutely aware of what this means for borrowers and their ability to both purchase new properties, but to also meet affordability and refinance.
“There is an appetite to add to portfolios where the numbers add up, and we’ve seen our own purchase business ticking up quarter-on-quarter.
“Again, our assumption is that a falling rate environment will give landlords more confidence and money to be able to buy, and while we don’t see remortgage and purchase business parity being on the cards anytime soon, we do think we’ll see more purchasing as a percentage of our business through the rest of 2024.”
