Average rental yield sees marginal decline compared to pre-pandemic levels
Average UK rental yield currently sits at 3.5%, a marginal decline from the 3.6% registered prior to the COVID-19 pandemic, according to research by lettings management platform Howsy.
Even with the obstacles facing the current market, there are still buy-to-let (BTL) pockets providing strong returns for landlords.
Bradford has the highest average yield at 10%, with Gwynedd (6.2%) and North Down (6%) following behind.
Other areas that rank highly are Glasgow, Liverpool, Preston, West Dunbartonshire, North Lanarkshire, Forest Heath and Manchester.
At the other end of the scale, Malvern Hills, Kensington and Chelsea and Chiltern have the worst average yields at 2.3%.
The largest increase in average yields has been in North West Leicestershire, up 1.4% during the pandemic.
Arun, Corby and West Norfolk have also seen increases of 0.8%, while North Dorest and Newark and Sherwood have had an uplift of 0.7%.
Kettering, Derby, Breckland and Falkirk are also among the top 10 for largest rental yield uplifts during the pandemic.
Rhondda Cynon Taf, York, Gedling, Chiltern and the Vale of Glamorgan, however, have seen the largest declines, between 1% and 3.5%.
Calum Brannan, founder and CEO of Howsy, said: “The current lockdown has seen the government introduce measures such as buy-to-let mortgage holidays and a ban on tenant evictions and this has understandably caused many buy-to-let investors to hesitate.
“But despite this overall air of market uncertainty, tenants still need to find rental properties and so it continues to be business as usual for many landlords and those agents who have adapted to a more digital mode of operations.
“There’s also still a large number of areas where potential and existing landlords can secure favourable yields much higher than the national average, with some areas still seeing an uplift in yields despite the spread of the coronavirus.
“As the nationwide lockdown continues to drag on, there may be another silver lining for buy-to-let investors.
“Should the property market see prices fall, the cost of investing will be lower, boosting profit margins in a sector that has had it tough of late due to government squeezes on profitability.”