Fleet: Rental yields on residential BTL homes at 6.3%

The rental yields on residential buy-to-let (BTL) properties across England in Q1 have remained at 6.3% year-on-year, according to Fleet Mortgages’ Buy-to-Let Rental Barometer.

This is 0.6% up on the rental yield figure for the last three-month period, covering Q4 2020.

Between Q4 2020 and Q1 2021, only one region, the East Midlands, showed a quarterly drop in rental yield from 6.9% to 6.7%, while Greater London recorded the same quarterly figure of 5%.

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All other English regions showed an increase in yield, with Yorkshire & Humberside up 2.5%, the North East and North West up 1.2%, the South West up 0.5%, East Anglia up 0.3%, and the West Midlands up 0.1%.

The North East of England posted the top rental yield regional figure for the third quarter running in Q1 2021, this time hitting 9.1%, with Yorkshire & Humberside in second spot at 8.2%, and the North West with 7.8%.

Fleet Mortgages found there was an increasing demand from tenants in many regions of England and Wales, which was not being met by supply, and was resulting in an increase in rents and rental yields.

The lender said this was likely to continue as the country moved out of lockdown, with tenants increasingly seeking to move to new properties, often in areas outside where they currently live.

Steve Cox, chief commercial officer at Fleet Mortgages, said: “In many ways, the yearly comparison we make within the Rental Barometer is something of a red herring, because – in this iteration – we are comparing the first quarter of 2021 with last year, which (for the most part) was pre-pandemic.

“With that being the case, it’s not surprising that we see a yearly drop in every region, particularly in Wales, since this is an outlier as this is the first time in a year we’ve been able to present meaningful data. We fully anticipate that, in future iterations, yields in Wales will improve.

“However, the far more pertinent comparison is a quarterly one, and shows the improving strength of the private rental sector for landlords, the impact an increase in demand is having in many regions, with the anticipation that this will continue through the rest of the year.

“Quarterly rental yields fell in only one region – East Midlands – and then by only 0.2%; London stayed static while rental yields increased in all other English regions showing that we have a strengthening private rental sector, one in which landlords are achieving the better yields they seek, and where there is strong tenant demand to access.

“That should be very good news for adviser’s landlord clients with all indications that many are looking to add to portfolios throughout this year, potentially taking advantage of the remaining stamp duty holiday timescale in order to do so.

“We would urge advisers to therefore speak to Fleet to see how we can support their landlord clients in refinancing and/or purchasing to help them achieve their portfolio and yield goals.”