Residential landlords enjoyed an average rental yield of 5.6% across England and Wales in the second quarter of this year, shows new data from Fleet Mortgages.
This average figure is the same as that recorded in Q2 2020, although yields have shifted on a regional level.
The biggest yearly rise in yields can be found in Yorkshire and the Humberside, where average yields rose from 6.1% to 7.2% – a gain of 1.1%.
This was followed closely by the East Midlands, where landlords saw average yields grow from 4.5% to 5.5%.
The other side of the story is most apparent in Wales, where yields went from 15.2% to 6.3% – a downward change totalling 8.9%. However, Fleet does point out that its numbers for this country are “only based on limited data.”
In the North West of England, average yields shrank by 1.2%, going from 8.1% to 6.9% and in the South East, Fleet marked a reduction from 5.8% to 5.2%.
Fleet chief commercial officer Steve Cox comments: “In the last iteration of the Rental Barometer, we suggested the figures were something of a ‘red herring’ as they compared the first quarter of this year with a period just prior to Lockdown one.
“These figures also cover a period half of which saw the housing market effectively closed down, so we are also cautious about the yearly comparison, particularly for Wales because it is based on limited data.
“However, our data for Q2 2021 and the first quarter of this year is very robust and gives a strong indication of the rental yields being achieved across all the regions Fleet lends in.
“We’re starting to see a degree of stability in these, with a number of regions which have posted close to double-digital rental yields slipping back slightly, and those who were at the other end of the scale starting to creep up.
“There are of course exceptions to this, specifically Greater London, which has seen rental yield drop again, however this is a very complex (and often different) regional market to others within the country, and we should not think it is indicative of other regions or indeed what is to come there.
“The positives for landlords are the still strong yields being achieved pretty much right across the board, and certainly in the North we can see tenant demand continuing to outstrip supply.
“Indeed, in other regions we can view the ongoing strength of demand, as tenants seek to move to properties which may be more in keeping with a post-pandemic work/life balance.
“Overall, the PRS could clearly benefit from greater levels of supply. However, landlords are adding to portfolios in order to meet this gap, and the strength of the buy-to-let investment remains undiminished.”
