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Lettings Market On Fire - Rental yields now highest for six years

Newly published rental yield from Rightmove reveals that the average yield across Great Britain is 5.5 per cent.

This is the highest yield since 2016 when it was 5.6 per cent. 

The North East and Wales have hit record yields, while yields in London, South West and Yorkshire are at their highest since 2015. Yields in the East of England and South East are at their highest since 2016.

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The data comes in Rightmove’s monthly rental market tracker, which also states that average asking rents have increased at the fastest rate on record, and are now £1,068 per calendar month outside of London – that’s no less than 9.9 per cent higher than this time last year.

Average rental growth is outpacing house price growth in all but three regions - East Midlands, South West and the South East - while in London rents have hit a new record of £2,142 pcm, seeing the largest quarterly jump of any region.

Rents in the capital have risen beyond pre-pandemic levels for the first time, and are now three per cent higher than at the beginning of 2020.

Meanwhile competition between tenants for available properties is nearly double compared to this time last year.

Underlying all that, tenant demand is 32 per cent higher than this time last year but the number of available properties is 51 per cent lower.

 

Landlord yields:

Region

Average landlord yield Q4 2021

Annual change in yield

Great Britain

5.5%

+0.4%

North East

7.9%

+0.4%

Scotland

7.3%

+0.5%

Wales

6.8%

+0.3%

North West

6.6%

+0.2%

Yorkshire and the Humber

6.5%

+0.1%

West Midlands

5.9%

+0.1%

East Midlands

5.9%

+0.1%

South West

5.5%

+0.2%

East of England

5.3%

+0.2%

South East

5.2%

+0.2%

London

4.6%

+0.4%

Local area biggest yield increases 2021 vs 2020:

Area

Region

Average yield 2020

Average yield 2021

Difference in yields 2021 vs 2020

Preston

North West

6.1%

9.1%

+3.1%

Exeter

South West

6.0%

8.8%

+2.7%

Swansea

Wales

9.0%

11.2%

+2.2%

Nottingham

East Midlands

8.2%

10.3%

+2.1%

Rushcliffe

East Midlands

5.6%

7.7%

+2.1%

Renfrewshire

Scotland

8.1%

9.9%

+1.8%

Gwynedd

Wales

9.3%

11.0%

+1.7%

Rhondda Cynon Taf

Wales

7.6%

9.1%

+1.5%

Warwick

West Midlands

5.9%

7.3%

+1.5%

East Ayrshire

Scotland

8.3%

9.7%

+1.4%

Want to comment on this story? If so...if any post is considered to victimise, harass, degrade or intimidate an individual or group of individuals on any basis, then the post may be deleted and the individual immediately banned from posting in future.

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    Supply and demand, no different to the present secondhand car / van market

  • icon

    Beware the new resentful bitter tenant enquiry for your properties. Very much used to paying below the market rate. Leaving cos the Landlord is selling!! Angry that they can’t just waltz up and move in with minimal references with all their pets. Angry that we are able to pick and choose the best applicants.

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    The world is full of the lazy bitter and twisted who won't help themselves, leave them to councils to house in their sub standard damp properties on no go council estates.

     
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    I don’t understand any of this or how they work out yields so I won’t pretend I do.
    I thought it was the price of the property relative to the rent you receive, less your costs including repairs & maintenance and now factor-in Section 24 it all impacts on your return. So keep in mind a Terraced or Semi Detached house in West London costing at least double as much as a similar house in Nottingham where they are talking about 8%+ yields as apposed to 4%+ in London average figures, so mine is well below average and hammered with Regulation’s that apparently haven’t impacted on them yet, for any new buy 2 let LL they’ll think it’s a piece of cake, the tables are very misleading in my view.

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    Michael, agents use the gross annual rent relative to the sale value (or current value) of the house - gross yield. Most experienced landlords know this is very finger in the air. I work on return on capital employed - ie what I have invested (my skin in the game or my equity) relative to net rent after mortgage payment. Obviously this doesn't take account of expenses, taxation etc, but it's still a much better benchmark for me than gross yield. This gets better over time assuming that a) rents stay strong, b) house values increase and c) I don't re-mortgage (or at least not too much)

     
  • icon

    So yields are the same as they were six years ago, which suggests they dipped and have now recovered. I wouldn’t describe the rental market as being on fire - there is a shortage because many landlords have sold up or converted to short let’s as a result of tax increases and increasingly anti-landlord rhetoric from the government and media.

    As Andrew Townshend says above - supply and demand. Politicians have bashed landlords, complained about them, increased taxes, and never tire of adding regulation and restrictions while at the same time have been equally proactive in stripping away accountability and responsibility for irresponsible tenants. Landlords have seen the direction things are going in and got out. Now there’s a shortage and renters are struggling to find properties to rent which undoubtedly drives up prices and allows landlords to be far more picky who they rent their properties to.

    No doubt the politicians answer to the mess they have created, will be to carry on with all the above to make the mess worse, and then conclude they need to do more of the above to fix it. All the while blaming the few landlords that are left for some reason.

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    Brilliant comment.

     
  • icon

    As said in the first post..... supply and demand, and the supply is about to get a whole lot thinner when the EPC C comes to town, then watch the scrabble for properties really hot up, it will be akin to a childs birthday party where the kids are running around a smaller and smaller number of chairs to sit on.... then the music stops !!!

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    They have pushed the boundary twice on these EPC's.
    What's to stop them from asking for a 'B' rating somewhere down the line?
    They are obsessed with making life as difficult as they can for private landlords.
    Where I am in Wales, we have the Rent (not so smart) Wales imposing new regulations on us in July, giving tenants more protection from legitimate landlords, whilst the 'rogue' element just ignores the debacle.

     
  • David Saunders

    James Brokenshire MP deceased, who was then Secretary of State for housing, first announced the governments intention of outlawing section 21 in early 2019. Two Prime Ministers, an election, UK exiting of EU, a pandemic and the fall of Afghanistan later Eddie Hughes MP Minister for levelling up now states that the delay in publishing a white paper on Renters Reform is due to not wanting to cause any unforeseen unintended consequences but I'd have thought a blind man could see what a catastrophe it will be for the PRS when no fault eviction section 21 is outlawed. What's going on.

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