If you’re looking for the best rental yields, the North West and the North East are the only two regions in the country where landlords are likely to achieve more than 8%.
Rental yields have risen once more year-on-year across every region in England and Wales, albeit slower than the increase the sector experienced in the previous quarter’s results, according to a new report released by Fleet Mortgages.
But while rental returns have climbed by 0.3% since Q3 last year, certain locations have bucked the trend with a much stronger rise, and these regions are attracting property investors and landlords seeking the best yields in the current market.
Leading the way with the biggest jump since this time last year is the North East, where yields have risen by 1.3% to an average of 9.3%, retaining its position as the current highest yielding region in the country according to this barometer.
In second position with the highest yields in England and Wales is the North West, where landlords can expect to bring in an average of 8%, up by 0.4% since this time last year. The North West also comes out top when it comes to recent capital appreciation, as well as also leading the way for future predictions.
The West Midlands and East Midlands are two other regions to have seen above-average yield increases since Q3 2023, with a rise of 1.2% and 1.1% respectively. With average yields in these areas now hitting 7.6% and 7.5%, they fall just behind Yorkshire and Humberside (7.7%) as the top-yielding locations in the country.
There remains a North-South divide
At the bottom when it comes to yields on Fleet Mortgages‘ barometer are Greater London and East Anglia, which both rake in an average of 5.9% for landlords operating there.
Despite its low yields, London remains an ever-popular place to invest for many – particularly overseas – landlords. It has one of the highest densities of privately renting tenants in the country, and although house prices have stagnated there over recent years, has shown strong capital appreciation historically.
The South East and South West also tie with yields of 6.1% – again below the England and Wales average of 7.2%. However, the South East has performed better than the national average over the past year with a 0.6% rise, so perhaps it is set to see some strengthening in the near future.
Steve Cox, chief commercial officer at Fleet Mortgages, noted that the pattern was shifting slightly between the North and the South of the country, although the North still remains relatively far ahead.
“Regionally, it is those in the North of the country that continue to top our Rental Yield table but we have seen a shrinkage in the difference between North and South and while regions such as Greater London and the South East continue to show an uplift in their average monthly rent per property, in the North East, for example, this has actually dropped from the last quarter,” he said.
Where can landlords target in the North West?
Among the most popular places in the North West of the country for landlords to invest are the major cities of Manchester and Liverpool. Both are known for their strong rental environments, while Liverpool has regularly appeared as the top-yielding city in the UK over recent years.
Both cities have also experienced high levels of redevelopment and regeneration over the past decade, with plenty more exciting schemes in the pipeline. This is not only attracting new inhabitants, but also businesses, boosting the scope for landlords looking to invest in properties to let out.
Outside of the major cities in the North West, places like Stockport, Preston and Bolton have been highlighted as exciting areas for investment – particularly for landlords looking for areas with strong tenant demand yet a cheaper price point than the likes of Manchester and Liverpool.
Stockport in particular has been in the national media recently for a range of accolades, having been recognised as a top place to live and invest in both the North West and nationally, as well as a strong location for business.
If you’re looking for your next property investment opportunity in one of the highest-yielding locations of the UK, including several in the North West, get in touch with BuyAssociation today to speak with one of our investment consultants about our current and upcoming projects.
