The North East region led with the highest annual rental yields, up by 0.5% to 9.2%. However, its average rent saw an annual fall of 6.2% to £844.
The North West effectively saw no growth, but retained the second-highest annual rental yield of 8.8%. Annual average rents rose by 1.8% to £1,188.
Yorkshire and Humberside, Wales, East and West Midlands reported rental yields at or above 8%. All four of these regions saw the highest growth in their annual average rents.
Leading with the largest yearly increase in average rents was Yorkshire and Humberside, with a 23.6% rise.
Meanwhile, Wales saw a 0.9% dip in annual yields compared to this time last year. The annual average rent, however, rose by 14.4% to £1,214.
Aldermore Insights with Jon Cooper: Edition 9 – Why lending strategy is becoming more central in buy to let
Sponsored by Aldermore
The South West also saw a 0.5% fall in its rental yields to 6.6% this year. Its quarter-on-quarter figures showed a 4.6% decrease in average rent, but yearly saw a 4.4% rise to £1,423.
On average, the South reported the lowest rental yields. Greater London saw a 0.3% rise to 6.3% whilst the South East saw a 0.4% increase to 6.9%. Greater London had the smallest yearly increase in average rents by 1.6% to £2,364.
Private rental market slowdown
Fleet’s own figures showed its share of applications received from landlords with 6-14 properties grew from 26% in Q1 to 30% in Q2.
At the same time, its first-time landlord applications represented 9% of all business, slightly down on the 11% recorded in the first three months of the year.
Steve Cox, chief commercial officer at Fleet Mortgages, said: “Q2 for the buy-to-let (BTL) and wider mortgage market has effectively been a ‘flip reverse’ of Q1. It began with considerable uncertainty as financial markets reacted to events in the Middle East, meaning funding costs increased and lenders had to adjust pricing accordingly.
“However, the latter weeks of June in particular have been much more encouraging, with greater stability returning, swap rates easing and lenders like ourselves once again able to compete through lower rates and a broader range of products.
“While it’s important not to assume this calmer environment will continue indefinitely, the market is undoubtedly ending the quarter in a stronger position than many expected a few months ago. The Monetary Policy Committee has held Bank Base Rate, inflation looks like it has, to some extent, been contained and advisers have a much-improved range of options for their landlord borrower clients.
“Our figures also continue to show professional landlords remain active. Purchase activity has picked up, portfolio landlords continue to expand where opportunities exist and limited company borrowing remains the preferred route for most investors. Those are all positive indicators for the underlying strength of the BTL sector.
“Periods of volatility have become a feature of the mortgage market rather than an exception, and advisers and landlords increasingly understand this ‘new normal’. The important point is that when conditions improve, as they have during the latter part of this quarter, the market is able to respond quickly, providing borrowers with greater choice and improved pricing.”
