Fleet Mortgages, the buy-to-let specialist lender, has launched the seventh iteration of its buy-to-let rental barometer covering Q3 2021 rental yields across England and Wales.
Overall, the barometer shows slight falls in rental yields compared to the same quarter last year, however Fleet point out that in 2020 this covered the first full three-month period out of lockdown where yields spiked in certain parts of the country.
It points to a more recent comparison between Q3 and Q2 this year, with total rental yield on residential buy-to-let properties across England & Wales up to 6.3%, a 0.7% increase on the previous three-month period.
Also, seven out of 10 regions – all except East Anglia, South West and South East (which has the same rental yield figure as Q2) – have seen an increase on the Q2 2021 figures.
Fleet said this shows rental yield in many of the regions of the UK improving throughout 2021 and there are only minor yearly drops across most of the regions analysed.
Once again, the North East of England posted the top rental yield regional figure for the fifth quarter running, improving again to 8.3% (up from 8% in Q2 this year), with the North West climbing into second place with 7.7% (up from 6.9%), Yorkshire & Humberside in third with 7.3% (up from 7.2%), and Wales also registering a 7.3% yield (up from 6.3%).
Steve Cox, chief commercial officer at Fleet Mortgages, said: “Seeing that rental yields in all regions, apart from the South East, have slightly dipped on a year ago might be viewed negatively in some quarters, but it’s important to understand the three-month periods they are comparing.
“Q3 last year was post-Lockdown one and perhaps gives a skewed notion of yield, particularly in an environment and market which had effectively been closed prior to this.
“We saw yield in a number of regions jump dramatically and the fact that our figures this year are, for the most part, only slightly down on those shows a strengthening performance for rental property.
“When you compare the two most recent quarters in 2021 we can see a steady improvement in yields throughout the year, driven by incredibly strong tenant demand, and other UK housing market fundamentals such as a lack of supply for both tenants and owner-occupiers.
“Supply remains the real driving force here and it’s simple economics to point out that with tenant demand as it is, and given the supply of PRS properties, yield performance benefits greatly.
“We continue to see excellent performance levels for rental yield across the North of England, and it’s unsurprising that landlords are looking at their options here. However, a little further south and we are also seeing better performing properties in the Midlands and in Wales.
“It’s therefore possible to see why the PRS and the buy-to-let market continues to retain its allure for landlords, many of whom have taken advantage of the stamp duty holiday to add to portfolios and will continue to do so as opportunities arise.
“This is aided by the strength of finance options available to landlords at present and the array of competitively-priced mortgages whatever their needs and circumstances. The UK is not going to change its love affair with property anytime soon and this bodes extremely well for advisers and their clients.”