Areas with highest and lowest rental yields unveiled

Date:

Wednesday 25th July 2012

Rising rents mean better income returns than putting money in a savings account

Rental values in England and Wales increased for the third month in a row in June, once again reinforcing the fact that now is a good time to invest in the buy-to-let market.

The latest Buy-to-Let Index from LSL Property Services plc shows that average rents rose by 0.9% to £718 per calendar month, which is just short of the all-time high of £720pcm reached last autumn.

The hike in rental prices is ultimately being supported by historically high demand from tenants, including many would-be homebuyers struggling to secure a mortgage because of tight lending criteria.

LSL projects that the "sheer weight of tenant demand" will continue to push up rents across the country. But where is best to invest and where are property investors achieving the highest rental returns?

London is ultimately the most desirable place to invest in property. The supply-demand imbalance means that prospects for capital growth look good while at an average of £1,047pcm, homes in the city command the highest rental values in the country. But high property prices means that London does not offer the highest rental yields.

According to research from the specialist buy-to-let mortgage lender, Paragon Mortgages, the highest rental yields are currently achievable in Yorkshire and Humberside, where properties produced an average rental return of 6.8% during the second quarter of this year.

The regional spread at the top of the table is diverse with landlords in Wales achieving a yield of 6.7% in Q2 up from 6% in Q1.

However, landlords in the South West have stayed put, retaining their third place quarter-on-quarter with an average yield of 6.2%.

Landlords in other Eastern regions saw a slight decline in the average yields their portfolios generated in the second quarter, with landlords in the North East achieving a 6.1% yield and in the East of England a yield of 5.7%. At 4.5%, the East Midlands produced the lowest yield in Q2.

The average yield achieved by all landlords remained at 6.2% in Q2. Professional landlords with property portfolios of 20 or more properties continued to achieve a higher than average yield of 7% in Q2.

Yield table: Yorkshire and Humberside (6.8%), Wales (6.7%), South West (6.2%), South East, exc London (6.2%), outer London (6.2%), North East (6.1%), West Midlands (6%), Central London (5.8%), East of England (5.7%), East Midlands (4.5%).

Unsurprisingly, a growing number of landlords are applying for buy-to-let mortgages to expand their rental property portfolio, and this trend is set to continue in the foreseeable future.

By Marc Da Silva

New Homes in Yorkshire

Revelation, Hull
Revelation, Runnymede Avenue, Kingswood, Hull, HU7 3FQ
NOW AVAILABLE from £116,995
Revelation in Hull is a stunning development of thoughtfully designed family homes from a brand new range of innovative designs. In the heart of an...
Seebohm Derwenthorpe, York
Derwenthorpe,york Quarter 3, The Seebohm Quarter, York, YO10 3DN
NOW AVAILABLE from £234,995
The Seebohm Quarter of the Derwenthorpe development is in partnership with the Joseph Rowntree Housing Trust. These new homes in York feature a...
Woodberry, Market Weighton
Woodberry, Northgate Vale, Market Weighton, York, YO43 3EA
NOW AVAILABLE from £209,995
Situated on the edge of the Yorkshire Wolds you will discover an incredible selection of new homes in Market Weighton. Popular due to its mix of...
Chevin Park
Chevin Park, Menston, West Yorkshire, LS29 6AD
NOW AVAILABLE from £209,950
Join in the fun at Chevin Park this Saturday 26th and Sunday 27th July and find out how you can have all you've ever wanted in a home, all...
Church View
Church View, Outgang Lane, Laughton Common, Dinnington, S25 3PJ
NOW AVAILABLE from £129,950
Join in the fun at Church View this Saturday 26th and Sunday 27th July and find out how you can have all you've ever wanted in a home,...
College Gardens
College Gardens, Wood Lane, Stannington, Sheffield, S6 5HF
NOW AVAILABLE from £256,950
College Gardens is closed Monday 21st July, opening as normal Tuesday 22nd July. We apologise for any inconvenience.   Join in the fun at...
Meadowgate Park
Meadowgate Park, Manston Lane, Crossgates, Leeds, LS15 8SU
NOW AVAILABLE from £259,950
Join in the fun at Meadowgate Park this Saturday 26th and Sunday 27th July to find out how you can have all you've ever wanted in a home all...
Melton View
Melton View, Pasture Lane, Mexborough, S64 0JJ
NOW AVAILABLE from £119,950
Join in the fun at Melton View this Saturday 26th and Sunday 27th July to find out how you can have all you've ever wanted in a home...
Pembridge Park, Auckley
Pembridge Park, Hurst Lane, Auckley, Doncaster, DN9 3NW
NOW AVAILABLE from £259,995
Pembridge Park is an exciting new mix of luxurious new detached homes, located just off the prestigious Bawtry Road. House hunters seeking the...
Woodlands Walk, Branton
Woodlands Walk, Doncaster Road, Branton, Doncaster, DN3 3YA
NOW AVAILABLE from £181,995
Woodlands Walk is a small development of new homes in Branton. Set in a beautiful village just ten minutes from Doncaster town centre, this...
Fellows Place, Castleford
Fellows Place, Leeds Barnsdale Road, Whitwood, Castleford, WF10 5GB
NOW AVAILABLE from £172,995
At Fellows Place a quality range of two, three and four bedroom homes are being built which comprises a stylish mix of homes. These make the...
Greencroft
Greencroft, Burton Road, West Green, Barnsley, S71 5SJ
NOW AVAILABLE from £156,950
Join in the fun at Greencroft this summer to find out how you can have all you've ever wanted in a home all included in the price....