Yield league table shows best (and worst) performing ...

A respected league table of yields in different parts of England and Wales has issued its latest figures.

The Fleet Mortgages Buy-to-Let Rental Barometer for Q4 2023 shows an annual increase of 0.3 per cent in typical yields up to an average 6.9 per cent across England and Wales combined.

However three regions – the North East, East Midlands and the South West – have dipped very slightly in the past quarter.

A large 2.2 per cent increase in rental yields over the year gives Wales pole position with an 8.9 per cent yield, which was also 1.7 per cent up on Q3 2023.

Close behind the North West and Yorkshire and Humberside saw rental yields increase 1.1 per cent annually.

Fleet’s average loan size fell on the previous quarter, down from £187,000 to £175,000, with the average rental cover at loan origination also dipping from 177 to 170 per cent.

Steve Cox, chief commercial officer at Fleet Mortgages, says: “While Q4 differs to the two previous quarters in terms of having three regions showing falls in average annual rental yields, those falls are small, and we have total yield across all those England and Wales regions in which Fleet lends continuing to move upwards, now totalling 6.9 per cent.

“That remains a strong rental yield figure, however in other regions – notably Wales, the North West and Yorkshire and Humberside – rental yields have jumped significantly again, reflecting no doubt a continued lack of supply compared to overall tenant demand.

“Through 2024 we might anticipate rents come off these highs a little, but it’s still likely to be the case that the number of prospective tenants wanting property far outweighs its availability.

“2023 was a challenging year, not least in terms of landlords’ ability to add to portfolios given the big increase in mortgage product pricing. That has clearly eased in recent weeks, and we ourselves have seen purchase lending improve, but we are not anticipating a huge improvement in purchase numbers, albeit lower rates and the ability to meet affordability criteria, will allow some landlords to buy.

“Whether this changes significantly might have a lot to do with whether the Government acts on stamp duty in the March Budget, and whether rates continue to fall as they have done over the last month.

“Historically, we’ve tended to see more landlords active in the sector when rates are around the 5.0 per cent mark, and we’re getting there, so we would not rule out more purchasing, providing landlords can find the property they require – no easy feat in the current market.

“Overall, it has been a much more positive start to the year than we saw in the Spring and Summer of 2023, and while we are not anticipating a huge boost to buy-to-let transactions and lending activity, there is a far greater potential for it than we witnessed for most of last year.”

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