Still possible to get strong buy to let rental yields – and here’s where…

23 June 2020 | Renting

 Still possible to get strong buy to let rental yields - and here’s where…

New research has produced a series of league tables to identify where in Britain the best rental yields can be found.

The study, by peer-to-peer funder Sourced Capital, has revealed that buy to let rental yields on average have remained largely flat, up just 0.1 per cent year on year.

But this masks significant regional variations.

The North East has seen an annual increase of 0.12 per cent and on a local level, Corby has seen an uplift of 0.7 per cent on an annual basis. Elsewhere in the country Charnwood, Newcastle and Exeter have also seen positive growth with a jump of 0.5 per cent or more. 

Harlow in Essex and the Orkney Islands have enjoyed a 0.4 per cent increase, along with Ealing which enjoys the largest increase of all London boroughs.

While Glasgow has seen a very marginal decline on an annual basis, the current average rental yield of 7.87 per cent remains the strongest in the UK buy-to-let sector.

Inverclyde, West Dunbartonshire, Midlothian and East Ayrshire also remain some of the most profitable pockets, while outside of Scotland, Burnley, Belfast and Blackpool also rank well. 

Sourced Capital managing director Stephen Moss says: “Turning a profit in the buy to let sector remains a tough ask with a number of government changes denting profitability and yields remaining largely flat.

“With COVID-19 presenting additional hurdles such as rental arrears and longer void periods, many are now turning to alternative options such as the peer to peer sector for a safer, more hands-off investment. 

“However, that’s not to say that a buy-to-let property won’t make a great investment should you place your money in the right pockets of the market. Buy to let returns are based on fine margins and so an annual increase of 0.7 per cent isn’t as insignificant as it may seem.” 

Top line rental yield and annual increase

Location

2019 (Q1)

2020 (Q1)

Change (2019 to 2020)

North East

4.97%

5.09%

0.12%

East Midlands

3.90%

3.93%

0.03%

West Midlands

4.01%

4.03%

0.02%

North West

4.53%

4.55%

0.02%

Wales

4.0%

3.9%

0.00%

Yorkshire and The Humber

4.53%

4.52%

-0.01%

South East

3.73%

3.71%

-0.01%

Scotland

5.9%

5.9%

-0.02%

East of England

3.60%

3.55%

-0.05%

South West

3.83%

3.78%

-0.05%

Northern Ireland

5.4%

5.4%

-0.10%

London

4.32%

4.10%

-0.22%

England

4.1%

4.1%

-0.08%

United Kingdom

4.9%

4.8%

0.10%

Locations with the highest increase in average rental yield year on year

Location

2019 (Q1)

2020 (Q1)

Change (2019 to 2020)

Corby

3.84%

4.52%

0.68%

Charnwood

2.99%

3.53%

0.53%

Newcastle upon Tyne

5.08%

5.60%

0.52%

Exeter

5.04%

5.52%

0.47%

Harlow

4.14%

4.51%

0.38%

Orkney Islands

4.81%

5.17%

0.36%

Ealing

3.71%

4.07%

0.35%

Lincoln

4.49%

4.84%

0.35%

Liverpool

4.78%

5.13%

0.34%

West Oxfordshire

3.88%

4.17%

0.29%

Barrow-in-Furness

5.21%

5.50%

0.29%

Merton

3.63%

3.90%

0.27%

King’s Lynn and West Norfolk

3.73%

3.99%

0.25%

North Lincolnshire

3.94%

4.20%

0.25%

Fylde

3.80%

4.04%

0.24%

Rushcliffe

3.13%

3.35%

0.23%

Swale

3.93%

4.15%

0.22%

Sefton

4.09%

4.30%

0.21%

City of Aberdeen

5.92%

6.12%

0.20%

Lambeth

4.14%

4.34%

0.20%

Locations with the highest current rental yield

Location

2019 (Q1)

2020 (Q1)

Change (2019 to 2020)

City of Glasgow

7.90%

7.87%

-0.03%

Inverclyde

7.27%

7.36%

0.09%

West Dunbartonshire

7.05%

6.83%

-0.22%

Midlothian

6.97%

6.83%

-0.14%

East Ayrshire

6.50%

6.62%

0.11%

Burnley

6.57%

6.46%

-0.11%

Na h-Eileanan Siar

6.25%

6.27%

0.02%

City of Dundee

6.38%

6.24%

-0.14%

Belfast

6.54%

6.23%

-0.32%

Clackmannanshire

6.25%

6.20%

-0.05%

Falkirk

6.48%

6.18%

-0.30%

City of Aberdeen

5.92%

6.12%

0.20%

North Ayrshire

5.90%

6.09%

0.19%

Blackpool

5.96%

5.99%

0.03%

Renfrewshire

6.14%

5.98%

-0.16%

Moray

5.87%

5.95%

0.09%

South Lanarkshire

5.86%

5.90%

0.04%

County Durham

5.77%

5.90%

0.12%

Hyndburn

5.93%

5.78%

-0.14%

North Lanarkshire

5.84%

5.74%

-0.10%

This post has originally been featured in Letting Agent Today.