Rental yields in England totalled 5.3 per cent in the second quarter of this year, falling from 5.6 per cent on an annual basis, research from Fleet Mortgages shows.
The biggest fall was in the East Midlands, where rental yields fell from 6.5 per cent to 4.4 per cent – a drop of 2.1 per cent, followed by Yorkshire and Humberside, where yields dropped from 7.2 per cent to 5.5 per cent, a fall of 1.7 per cent.
Rental yields in the North fell too, from 7.5 per cent to 6.3 per cent. Elsewhere, falls ranged from 0.1 per cent (East Anglia) to 0.6 per cent (the South West).
Growth occurred in three areas of the country, however: in the West Midlands, yields moved from 6.1 per cent to 7 per cent, an increase of 0.9 per cent, and the North West and the South East both saw 0.6 per cent growth – from 7.1 per cent to 7.6 per cent and 4.9 per cent to 5.5 per cent, respectively.
Fleet Mortgages distribution director Steve Cox says: “The economic backdrop may appear somewhat bleak at present, but this might change quickly depending on the type of recovery we get, and certainly at the moment our latest figures do not suggest sharp falls in rental yield. This may well be as a result of pent-up demand and more households being formed as a result of the lockdown, but it’s clear that more data will be required and it will be interesting to see whether this trend will be maintained into the rest of the year.
“Clearly, we will need to take into account the tailing-off of the furlough scheme and how this impacts on the level of unemployment in the country, the ability of existing tenants to keep paying their rent, and the re-introduction of evictions and repossessions at the end of the year, to get a clearer picture of where rents and yields are heading.
“What we do know, as a result of our experience through the credit crunch and the recession that followed, is rents are not as susceptible to these economic hits as property prices. Occupants are much more likely to opt for shorter-term financial commitments offered by renting in such circumstances, rather than move to longer-term property ownership.”
