0:04 AM, 13th December 2024, About A year ago 6
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Landlords across England have seen their rental yields climb in 2024, thanks to rising rents and relatively stable house prices.
According to a new analysis by Inventory Base, the average rental yield has increased by 0.05% since January, reaching 5.2%.
This growth is attributed to the rise in the average national house price from £294,799 to £308,782 and the average rent from £1,263 to £1,336.
London’s landlords are enjoying the highest yields at 4.9%, followed by the North East at 4.8% and the North West at 4.6%.
Other regions with notable yields include Yorkshire and Humber (4.4%), South West (4.3%), West Midlands (4.2%), South East (4.2%), East of England (4.1%) and East Midlands (4%).
The firm’s operations director, Siân Hemming-Metcalfe, said: “Despite many naysayers, England’s rental market is thriving.
“Modest house price growth combined with a strong rise in rent values means that landlords across much of the nation have benefited from growing yields since the start of the year.”
She added: “However, landlords currently face significant pressures, including high mortgage costs and government intervention such as the abolishment of Section 21.
“As a result, profit margins in the modern rental sector are thin.”
The data from Inventory Base also reveals which areas offer the best returns.
The London borough of Brent takes the crown for the highest yield growth, with a 0.7% increase to 4.6%.
However, the City of Westminster, Kensington and Chelsea and Islington also saw substantial yield growth.
Outside of London, landlords in Melton, Dartford, the Isle of Wight and Stockport recorded the strongest yield increases.
Portsmouth boasts the highest average yield at 6.2%, followed by Burnley (6.1%), Manchester (6%), the City of Bristol (5.9%), Newcastle-upon-Tyne (5.8%), Southampton (5.8%), Tower Hamlets (5.7%) and Nottingham (5.6%).
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Bob Summerfield
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Member Since August 2021 - Comments: 1
10:57 AM, 13th December 2024, About A year ago
Hi,
I have asked numerous people including two accountants what is the best way to work out yields on property and I have received different calculations,
could you please indicate how you have worked these out for this article.
Thankyou.
Neil Patterson
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Member Since February 2011 - Comments: 3450 - Articles: 286
11:21 AM, 13th December 2024, About A year ago
Reply to the comment left by Bob Summerfield at 13/12/2024 – 10:57
Hi Bob, I have added a link to the full data tables used.
Their Yield calculation is based on annual rental income as a percentage of Value.
Paul Essex
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Member Since June 2019 - Comments: 691
16:10 PM, 13th December 2024, About A year ago
So essentially none of those numbers work out as a net yield greater than simple bank interest, but with a massive amount of extra risk.
JamesB
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Member Since April 2022 - Comments: 124
10:15 AM, 14th December 2024, About A year ago
There is something very wrong with all the figures and the words in this article.
eg London’s landlords are enjoying the highest yields at 4.9%, followed by the North East at 4.8% and the North West at 4.6%.
Then later…
Portsmouth boasts the highest average yield at 6.2%, followed by Burnley (6.1%), Manchester (6%), the City of Bristol (5.9%), Newcastle-upon-Tyne (5.8%), Southampton (5.8%), Tower Hamlets (5.7%) and Nottingham (5.6%).
I then looked for the original source and it was just as odd.
Cider Drinker
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Member Since December 2023 - Comments: 1527
1:45 AM, 15th December 2024, About A year ago
Gross yield must be rental annual income divided by property value.
To increase the yield, you can charge more rent or have the property valued lower.
Yield is only a good metric if it’s used to compare similar potential investments. It provides a quick measure to sort the wheat from the chaff.
Before committing to the investment, a detailed business plan is needed and a potential profit, or range of profits, needs to be calculated.
It is, after all, only the profit that indicates success or failure.
With properties in my current portfolio, if I was to calculate yield, I’d take the annual rent and divide it by the amount of cash I could have in bank, after paying fees and taxes. This metric would help me choose which properties to get rid of next and which ones would be better left until last (in the hope that I die before I sell them and CGT can then be ignored).
But for now, ignore gross yield. It’s an almost pointless figure. You need to know the profit after tax. Net profit.
DPT
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Member Since October 2020 - Comments: 1094
11:28 AM, 15th December 2024, About A year ago
Reply to the comment left by Cider Drinker at 15/12/2024 – 01:45
Tbh, yield itself is a pretty useless metric as it ignores capital growth, which is often the inverse of the yield. Total return on investment is the only way for landlords to know how prospective properties compare.