North East beats London for best BTL returns

The North East has delivered the highest average rental yield for buy to let investors over the past five years, surpassing even London, research reveals.

According to an analysis from Benham and Reeves of England’s rental markets, the North East delivered a 4.84% average yield, exceeding London’s 4.42%.

Nationally, the average BTL was 4.17% with the North West offering the third strongest returns at 4.38%.

Yorkshire and the Humber follows at 4.29% and the South West at 4.03%.

The East Midlands recorded the lowest yield at 3.83%.

Last week, research from Lendlord that landlords in the North East also enjoyed the highest yields.

‘Landlords have been hit hard’

Marc von Grundherr, a director of Benham and Reeves, said: “Landlords have been hit hard in recent years with respect to the profitability of their portfolios and we have yet more red tape on the way this year via the government’s misguided Renters’ Rights Bill.

“Despite this, many have continued to enjoy the returns that are still available through well-informed and strategic investment into rental bricks and mortar and it’s fair to say that London remains the most lucrative area of the market, with the exception of the North East.”

Lower cost of investment

He added: “We’ve seen a particularly strong performance across the North, with a lower cost of investment contributing to favourable yields.

“However, where London’s is concerned, the returns on offer are being very much driven by a buoyant rental market, fuelled by an overwhelming level of tenant demand.”

He also predicts that ‘little will change’ this year and buy to let will remain as ‘one of the most consistent investments available’.