Landlords see yields rise in most areas

Landlords in most regions of England and Wales have seen their yields increase, a BTL survey reveals.

Fleet Mortgages say that yields have enjoyed annual and quarterly increases from 5.9% a year ago, and 5.4% in Q3 2022 to 6.2%.

The BTL lender highlights that six out of 10 regions enjoyed better annual rental yields, with two others maintaining their yields of a year ago.

Eight of the 10 regions monitored have shown a quarterly increase and just Wales and the West Midlands had not improved on their yields of Q3 last year, the firm says.

‘Significant annual and quarterly increase in rental yield’

Steve Cox, the chief commercial officer at Fleet Mortgages, said: “For the first time in well over a year, we can see the vast majority of regions in England and Wales returning a significant annual and quarterly increase in rental yield levels, set against the backdrop of a PRS which is woefully short of the supply required to meet tenant demand.

“Yields are strong right across the board with those in the North continuing to lead the way, while we have even seen increases in Greater London, which has tended to move in the other direction in the last few years.

“This will be positive news for landlords, and we hope will give renewed confidence to them that – should they be able to make the numbers work – there is a well of tenant demand to be accessed and yields to be achieved.”

North East of England retains its top regional rental yield figure

From Fleet’s BTL Barometer, the North East of England retains its top regional rental yield figure for the tenth consecutive quarter, showing only a slight 0.2% drop compared to a year ago.

The North West and Yorkshire and Humberside move back into the top three.

Apart from the North East, the only other region to post a drop in annual yields was in the West Midlands.

Fleet said a continued shortage of private rental sector supply, set against the backdrop of significant tenant demand, was driving rents higher, with landlords having to factor in higher mortgage costs.

The lender said while buy-to-let mortgage rates had continued to track lower in recent weeks, remortgaging landlords were likely to be paying more for their finance and this was likely to translate into the need for higher rents to cover these increases.

‘Cost of mortgage finance has still increased’

Mr Cox said: “The cost of mortgage finance has still increased over the period though, and this may well have resulted in a number of landlords – particularly those with just one or two properties – deciding to sell up.

“It all adds up to a situation where some landlords are being forced to leave, some landlords are contemplating their future against a backdrop of increased costs, some landlords want to buy but the supply of homes to purchase is low, and where overall there is clearly not enough properties for the tenant demand that exists and is growing.”

Fleet cuts rates on all of its seven-year mortgages

Meanwhile, Fleet Mortgages, this week unveiled price cuts on all its seven-year fixed-rate products.

Priced in line with recent swap rate movements, Fleet has been able to cut prices on all seven-year products by 44 basis points.

Its seven-year fix for both standard and limited company borrowers is now available at 4.99%, while its seven-year fix for HMO and multi-unit block borrowers is available at 5.09%.

The product fee is 3%, with a minimum of £750; the revert rate is Bank Base Rate plus 3%.

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