According to Fleet Mortgages’ Buy-to-Let Rental Barometer for the quarter, average yields were 7.7% in Q4, indicating a 0.3% annual improvement and a 0.2% quarterly rise.
The North East remained the top-performing region with a 0.3% year-on-year increase and a 0.6% quarterly rise to an average yield of 9.6%.
Yorkshire and the Humber, the North West, the West Midlands and the East Midlands all reported average rental yields of 8% and higher.
Fleet Mortgages said the gap between average yields in Southern and Northern regions was closing, with the South West, East Anglia, South East and Greater London all posting a yearly increase in average yields.
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The barometer also looked at the mortgages available to landlords and found that Fleet Mortgages’ average two-year fixed rate fell from 4.35% in Q3 to 4.27% in Q4, while its average five-year fixed rate had reduced from 5.04% to 4.97%.
Limited company borrowing made up 76% of applications submitted to the lender in Q4, slightly down from a high of 81% in Q3. Landlords with more than six buy-to-let (BTL) properties accounted for 55% of applications during Q4.
The average number of properties held by Fleet Mortgages borrowers rose from 12 to 14 on a quarterly basis.
Purchase business continued to make up more than a third of Fleet Mortgages’ mortgage business, at 37%, with remortgaging and product transfers making up the rest of the applications received.
Steve Cox, chief commercial officer at Fleet Mortgages, said: “As this latest Rental Barometer confirms, average rental yields have continued to move in the right direction, both year-on-year and quarter-on-quarter, which will be welcome news for landlords.
“At a national level, yields are now close to 8%, while a number of regions are above that level. Regions in the North continue to lead the way, but it is also a real positive to see yields rising across much of the South, which points to a more even market.”
He added: “While a small number of regions saw slight dips, the wider picture remains solid. We are seeing portfolios grow, with the average number of properties held by our landlord clients increasing again this quarter, showing ongoing confidence in buy-to-let investment.
“At Fleet, we remain fully committed to the buy-to-let sector and to supporting advisers and their landlord clients.”
