Rental yields in England dropped 3 basis points on average from Q4 2019 to Q2 2020, shows data from Fleet Mortgages.

The average yield across the country came in at 5.7 per cent in the last quarter of 2020 compared to 6 per cent the year before.

Furthermore, the data shows positive year-on-year changes in just two regions – the East Midlands, where average yields rose from 6.7 per cent to 6.9 per cent, and in the South West, where the data shows a change from 5.4 per cent to 5.5 per cent.

The most significant fall was in the North East, which saw average rental yields fall 1.5 per cent from 9.4 per cent to 7.9 per cent. However, this was also the region with the highest average yield reading overall in both Q4 2019 and Q4 2020.

Fleet says that portfolio landlords were more active at the close of last year. In Q4 2019, 25 per cent of this type of landlord purchased property. This rose to 38 per cent in Q4 2020.

The same pattern can be seen with purchases through a limited company, where Fleet records a jump of half of purchases by portfolio landlords happening through this vehicle to 67 per cent.

Fleet Mortgages chief commercial officer Steve Cox says: “Demand for private rental property remains strong and, coupled with a lower supply level in most parts of the UK due to the lack of social housing available, the options for many tenants lie purely in the private rental space.

“The research also shows that landlords, in particular portfolio landlords, have looked to take advantage of the stamp duty holiday. We saw an increase in purchase activity in the second half of last year, and the focus is now on ensuring those purchases complete before the deadline finishes at the end of March.

“Overall, the outlook for the private rental sector remains positive, and if there is a slight correction in terms of pricing in 2021, we anticipate that professional landlords will seek to add to portfolios in order to meet the increased demand from tenants.”