According to research by Aldermore, undertaken by Pegasus Insight, the average achieved rental yield is 6.6%, which is the highest for a decade.
The North West reported a rental yield of 7.4% and Yorkshire and the Humber sat at 7.2%, the strongest of the different regions.
Nearly three-quarters of landlords opted to use a broker to secure a mortgage, showing that brokers remained the “dominant sales channel for landlords”.
However, the report found that landlords’ confidence was fragile, as looking ahead to the next quarter, expectations for capital gains and yields are down 4% and 3% respectively.
Only 2% of landlords feel confident about the UK’s economic prospects.
Aldermore Insights with Jon Cooper: Edition 5 – Feeling enthusiastic about next year’s run-of-the-mill market
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Most landlords worried about Renters’ Rights Act
Nearly three-quarters of landlords surveyed feared that the Renters’ Rights Act will have a negative impact on their lettings activity.
Around 88% of landlords are concerned about the introduction of the legislation, which gained royal assent on 27 October.
Looking at other legislation, 92% of landlords are worried about the potential for National Insurance to be applied to rental income, which is rumoured to be a measure in the upcoming Budget.
Jon Cooper, Aldermore’s director of mortgages, said: “The numbers here paint an interesting picture, one that might seem contradictory at first glance. Whilst the average landlord is seemingly doing the best since pre-pandemic days when it comes to profits and yields, what’s increasingly obvious is that many landlords still feel jittery about what the next few years will bring.
“There’s work to be done to ensure the private rental sector remains a viable environment for both renters and landlords, and regulation must be implemented in a way that is fair, proportionate, and meaningful for all parties. At Aldermore, we know that many landlords are concerned about unintended consequences of the bill.”
He continued: “That being said, there may be potential benefits for the countless good landlords operating in the market. Many of the measures could boost trust and satisfaction among tenants, leading to longer tenancies, fewer void periods and fewer rent arrears.
“Upgrading properties could also mean higher property values. Landlords are experts at overcoming regulatory hurdles and I’m confident they will adapt their strategy, knuckle down and thrive under the new rules.”
