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Rental yields rise in North West but UK average dips – Fleet Mortgages

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  • 01/07/2020
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Rental yields rise in North West but UK average dips – Fleet Mortgages
Landlords in the North West are receiving the highest rental yield in England after a year on year rise of 0.6 per cent to 7.6 per cent in Q2, according to analysis by Fleet Mortgages.

The East Midlands posted the biggest year-on-year fall of 2.1 per cent down to a 4.4 per cent yield from 6.5 per cent last year.

Fleet’s Buy-to-Let Rental Barometer, comparing quarter two rental yields across England with Q2 2019, shows yields fell on average 0.3 per cent in total.

In the three months ending December 2019, Fleet’s previous report showed only one region, the North West, with a drop in rental yield over the period.

However, in the latest market update, there have been over one per cent falls in the North, Yorkshire & Humberside, and East Midlands, with smaller falls posted in the South West, East Anglia and Greater London.

The three regions to post positive rental yields over the period are the North West, West Midlands and the South East.

Fleet said that the overall data represented softer rental yields across England but with little signs of immediate falls.

The specialist lender said the findings did suggest that property investors should be cautious when predicting future rental yield levels because surveyors had only been physically valuing properties for around five weeks.

Furthermore, the lender warned that the support of the government’s furlough scheme and the current moratorium on evictions, may mean the full extent of the impact of the Covid-19 pandemic on rental demand and yield is not yet visible.

Steve Cox, distribution director of Fleet Mortgages, said: “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.

“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.”

Q2 figures for Wales were not included as different lockdown rules applied to the Welsh market which meant robust rental yield data was not available.

 

Average rental yields year-on-year change

North   6.3 per cent -1.2 per cent
North West   7.6 per cent +0.6per cent
Yorkshire and Humberside   5.5 per cent -1.7per cent
East Midlands   4.4 per cent -2.1per cent
West Midlands   7.0 per cent +0.9per cent
South West   5.1 per cent -0.6per cent
East Anglia   5.3 per cent -0.1per cent
South East   5.5 per cent +0.6per cent
Greater London   4.6 per cent -0.4per cent
Total   5.3 per cent -0.3 per cent

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