Rent yields outstrip house price rises

Rent yields outstrip house price rises

11:19 AM, 21st February 2023, About A year ago 1

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The UK’s highest average rental yields are in Bradford where they currently stand at a massive 11.06%, according to a new report.

Data from debt advisory specialists, Sirius Property Finance, revealed the current average UK rental yield is 4.08%, a 0.19% increase over the past year.

UK rental yields have increased by 2.5% over the past year as rent values outperform house prices.

Sirius has analysed yield data on a postcode level and found that some regional numbers outstrip this UK average.

Rent prices have increased significantly more than house prices

In the Leeds postcode district of LS2, yields currently average 10.05%, while in Manchester’s M14, they stand at 9.41%.

This northern dominance continues with Leeds’ LS4 district (9.18%) before the midlands starts to enter the picture with Nottingham’s NG7 (8.96%) and Birmingham’s B29 (8.57%).

Yields are being bolstered by the fact that rent prices have increased significantly more than house prices. In Bradford, the average house price is up 11.1% while the average rent has grown by 22.8%.

‘High demand is set to get even higher’

The firm’s head of corporate partnerships, Kimberley Gates, said: “Rent values have continued to climb over the past year and already high demand is set to get even higher.

“As more and more potential buyers are put off crossing over into the sales market by recent economic instability and the rising cost of living.

“As such, while rents have shot up, house prices have seen marginal drops in recent months.”

House prices in Exeter are up 12.8% in the past year while rent is up 85.6%

In terms of largest annual yield growth, Exeter’s EX4 tops the list with an increase of 2.56% in the past year bringing the current average to 6.52%.

Leeds’ LS2 ranks in second place with an increase of 2.33%, while Nottingham’s NG7 also makes another appearance after enjoying growth of 2.10%.

Areas of strong yield growth are being helped by much lower rises in house prices as compared to rent. A prime example is Exeter where house prices are up 12.8% in the past year while rent is up 85.6%.

‘Landlords are tackling increased costs just like everyone else’

Ms Gates added: “It’s important to acknowledge that while mortgage rate hikes and the cost-of-living crisis have indeed helped generate higher yields, landlords are also tackling increased costs just like everyone else.

“These higher portfolio running costs negate some of the yield increases we’re seeing and should be carefully considered when thinking about investing in new properties.”

 


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Comments

Accommodation Provider

10:08 AM, 25th February 2023, About A year ago

Dear news team can you help all landlords by educating journalists and the public about inflation. Inflation is running at 12% so that in real terms rents ARE NOT RISING AT ALL. Interest rates for risk free bank deposits are now 4%.... this means that a rental yield of 4% with lots of risk, like that of tenants not paying/roofs leaking and needing repairs, is not at all viable anymore. Oh and house prices will decline 10% .... even more in real terms due to inflation.

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