Rental yields for buy-to-let landlords are on a high in the north of England, and most areas should see a rise over the next 12 months, says report.
Property investment in the UK is expected to maintain its popularity over the coming year as shifts in the market have seen rental yields gain strength. This is according to a new quarterly buy-to-let index published by Fleet Mortgages.
The index revealed that the north of England’s average gross rental yields reached an impressive 9.1% in the north of England in Q4 2019, an increase of 2.6% from the same period the previous year. Taking the whole of last year into account, the report found that rental yields in the north were an average 7.6%, the highest in the country.
A strong buy-to-let market overall
The lowest figure was recorded in Greater London, with rental yields of 5.1% from property investments there, although this was 0.3% higher than yields recorded in Q4 2018.
According to Steve Cox, distribution director of Fleet Mortgages, these trends could spell a year of increased confidence and investment among UK buy-to-let landlords for 2020.
He stated: “With an overall squeeze on supply, coupled with a continued demand for quality properties by tenants, our view is that we are likely to see continued rental increases across the vast majority of regions, if not all, during 2020.”
“In that sense, property investment will remain increasingly popular, and we fully anticipate that all types of landlords will seek to add to portfolios over the course of the next 12 months.”
Resilient to Brexit and tax changes
While the country has been in a state of uncertainty, arguably since the 2016 EU referendum and leading up to the latest general election in December last year and the Brexit deadline, the rental market has remained relatively stable. Overall, there was rental growth across the whole of England and Wales in the last three months of 2019 according to the buy-to-let index.
With tax changes affecting many in the industry, landlords are placing more focus than ever on maximising their profits from their property investments. This goes for single-property landlords as well as those with extensive portfolios. By focusing on the north of England, many landlords are able to achieve highly attractive profits compared to those who stick with the south and London.
Landlords are making changes
Staying ahead of the changing property market and buy-to-let sector has never been more essential. Many landlords, according to Steve Cox, are now choosing to convert their single-tenancy properties into multi-tenant ones in order to attain better yields.
Houses in multiple occupation (HMO) are an increasingly popular property investment option due to the high yields associated with them. Because each room is let out on its own contract, with houses being occupied by several unrelated people, void periods are less of an issue with HMOs. Read more about the pros and cons in this article, and get in touch if you want to learn more about how to invest.
He added: “These higher yields are needed in order meet those growing tax liabilities, but to also offset the increased cost of acquiring tenants and regulation.
“Examples of these changes include more properties being converted into self-contained flats rather than keeping the property as a larger family home.”
“Coupled with a much greater inclination to purchase further afield – in those very regions showing greater rental yield increases – we can see why certain regions continue to outperform others.”