Rent yields rise in seven out of nine English regions

In the lender’s quarter three Buy-to-Let Rental Barometer, which analyses rents in the regions Fleet lends to, yields in the North East rose the highest with a two per cent increase year-on-year to 8.8 per cent.

East Anglia and the West Midlands followed with rises of 0.8 per cent and 0.6 per cent, taking yields in those regions to six per cent and 7.2 per cent cent respectively.

The only two regions that experienced a negative change were the North West and East Midlands, where yields dropped 0.2 per cent and 0.1 per cent to 7.8 per cent and 6.8 per cent respectively.

The results are a notable contrast to quarter two when only three regions posted positive rental yields over the period.

National yield up

Overall, the barometer shows rental yields on residential buy-to-let properties of 6.4 per cent across England, up 0.4 per cent from the 6 per cent achieved in the third quarter of 2019.

Steve Cox (pictured), distribution director of Fleet Mortgages, said: “It’s clearly positive to see the majority of regions in England posting increases in rental yields, and those regions which have showed a very slight dip were already at relatively high levels to begin with.

“We learnt from the post-credit crunch period over a decade ago that rents are not as susceptible to a recession as property prices, with many occupants more willing to opt for the shorter-term financial commitment offered by renting than longer-term property ownership.”

Cox said how yields performed in the coming months would give a better idea of how sustainable the current buoyancy of the rental market is, with unemployment expected to rise.

But early indications from Fleet’s analysis did not point to sharp falls in yields.

He added: “What we may see is further structural changes in rental demand particularly in urban centres with tenants who can now work from home feeling they are no longer tied to a property near to the office, and may look further afield where they might get more for their money.

“However, we have not yet seen any evidence to suggest this is becoming a trend.

“Within a shorter time-frame, the fact that, in England at least, the stamp duty holiday is available to landlord borrowers has undoubtedly been a factor in the increased interest in property investment purchases, with both new and existing landlords looking at the opportunities available and seeking to secure the savings that are available from the holiday.”