High Rental Yields: North West and North East Lead for Property Investors
The property market continues to see dynamic shifts, with the North West and North East offering high rental yields. These two areas offer the most promising opportunities for landlords seeking to maximise their returns. According to the latest report by Fleet Mortgages, landlords in these regions can expect to achieve yields surpassing 8%, positioning them as prime locations for property investors looking to enhance their rental income.
Consistent Growth in Rental Yields
Year on year, rental yields across England and Wales have shown steady growth, reflecting the resilience of the rental market. The pace of growth has slightly tapered compared to the previous quarter. However, every region has seen increased returns. Fleet Mortgages’ report highlights this broader trend. On average, returns have risen by 0.3% since last year’s third quarter. Yet, certain regions have shown much stronger growth. This stronger performance captures the attention of investors eager to capitalise.
The North East leads the pack with the most substantial increase in rental yields. Over the past year, yields in this region have surged by 1.3%, now standing at an impressive average of 9.3%. This makes the North East the top performer in rental yield, surpassing all other regions.
Close behind is the North West, where average rental yields now sit at 8%, marking a 0.4% rise since the same time last year. This region not only shows strong rental income potential but also ranks highly in terms of recent capital appreciation, reinforcing its status as a top choice for property investment.
Midlands See Promising Yield Increases
The Midlands has also emerged as a region with strong rental yield potential. Both the West Midlands and East Midlands have seen significant yield increases, outperforming the national average. In the West Midlands, rental yields have risen by 1.2%, reaching an average of 7.6%. The East Midlands closely follows with a 1.1% increase, bringing average yields to 7.5%. These figures put the Midlands regions just behind Yorkshire and Humberside, which boasts average yields of 7.7%.
Property investors looking for solid returns are increasingly turning their attention to these areas, attracted by the combination of rising yields and favourable market conditions.
The North-South Divide in Rental Yields
Despite the strong performance of northern regions, the disparity between the North and South remains evident. At the bottom of the rental yield rankings are Greater London and East Anglia, both of which offer average yields of 5.9%—well below the national average of 7.2%.
Nevertheless, London continues to be an attractive destination for many investors, particularly those from overseas. The city has a high density of privately renting tenants, making it a popular choice for landlords despite the lower rental yields. Additionally, while house prices in London have stagnated in recent years, the capital has historically shown strong capital appreciation, which can offset the lower rental returns for long-term investors.
The South East and South West also lag behind in terms of rental yields, with both regions recording average yields of 6.1%. However, the South East has shown some promise, with a 0.6% increase in yields over the past year. This could indicate potential strengthening in the near future, offering a glimmer of hope for investors focused on southern regions.
Regional Trends in Rental Yields
Steve Cox, Chief Commercial Officer at Fleet Mortgages, noted the North still leads in rental yields. However, the gap between the North and South is narrowing. Cox explained that the North continues to top the Rental Yield table. Yet, he observed a shrinkage in the difference between these regions. Furthermore, Greater London and the South East have seen an uplift in average monthly rents. In contrast, the North East has experienced a slight drop in rental income this quarter.
This shift in regional performance reflects broader economic and market dynamics. It includes varying levels of tenant demand, property prices, and regeneration efforts.
Investment Hotspots in the North West
Among the most attractive areas for property investment in the North West are the major cities of Manchester and Liverpool. These cities have long been recognised for their strong rental markets, offering landlords robust opportunities to achieve high returns on investment. Liverpool, in particular, has consistently ranked as one of the top-yielding cities in the UK, thanks to its combination of affordable property prices and high tenant demand.
Both Manchester and Liverpool have undergone significant redevelopment and regeneration over the past decade. This has not only improved the quality of life for residents but also attracted new businesses and industries to the area, further boosting demand for rental properties. Investors looking to capitalise on these trends are finding that these cities offer a perfect balance of strong rental yields and potential for future capital appreciation.
In addition to the major cities, several smaller towns and cities in the North West are emerging as investment hotspots. Stockport, Preston, and Bolton are among the areas that have been highlighted for their investment potential. These locations offer a more affordable entry point for landlords compared to Manchester and Liverpool, while still benefiting from strong tenant demand and attractive rental yields.
Stockport, in particular, has garnered national attention in recent years. It has been recognised as one of the best places to live and invest in the North West, thanks to its combination of good schools, transport links, and ongoing regeneration projects. The town has also become a hub for business activity, attracting a wide range of industries and boosting the local economy.
Exploring Investment Opportunities in the North East
While the North West boasts strong rental yields, the North East has also emerged as a top region for property investors. In addition to its high average rental yield of 9.3%, the North East offers several other advantages for landlords.
One of the key factors driving the strong rental market in the North East is the affordability of property. Compared to other regions of the country, property prices in the North East remain relatively low, making it an attractive option for investors seeking to maximise their returns. The region has also benefited from a number of regeneration projects, which have improved infrastructure, housing, and employment opportunities.
Popular cities for property investment in the North East include Newcastle, Sunderland, and Middlesbrough. These cities offer a range of opportunities for landlords, from student accommodation to family homes. The demand for rental properties remains high, driven by a combination of affordable living costs and a growing population.
Rental Yields in Yorkshire and Humberside
Yorkshire and Humberside also present attractive opportunities for property investors. With average rental yields of 7.7%, this region ranks just behind the North East and North West in terms of rental returns. Cities such as Leeds, Sheffield, and Hull offer a range of investment opportunities, from city-centre apartments to suburban family homes.
Leeds, in particular, has seen significant growth in its rental market in recent years. The city has a large student population, which drives demand for rental properties, as well as a thriving professional sector. Investors looking for long-term rental income and capital appreciation may find Leeds to be a promising location.
Why London Remains Attractive Despite Lower Yields
Rental yields in London remain lower than in the North. However, the capital continues to attract investors worldwide. London’s appeal stems from its status as a global city. It offers strong potential for capital appreciation. Despite a slowdown in house price growth, London has shown resilience. Historically, it delivers some of the highest returns for property investors.
One of the key factors driving London’s rental market is the high demand for rental properties. With a large population of private renters and a limited supply of housing, landlords can expect consistent demand for their properties. This demand is particularly strong in central areas and popular neighbourhoods such as Camden, Islington, and Hackney.
For investors with a long-term strategy, London offers the potential for significant capital growth. While rental yields may be lower compared to northern regions, the capital’s property market has a proven track record of delivering strong returns over time.
The Role of Regeneration in Boosting Rental Yields
One of the key factors driving the strong rental yields in northern regions is the impact of regeneration projects. Cities such as Manchester, Liverpool, and Newcastle have undergone significant redevelopment in recent years, with new housing, transport links, and commercial spaces transforming these urban centres.
Regeneration not only improves the quality of life for residents but also boosts the appeal of these cities for businesses and investors. As more people move to these areas in search of work and better living conditions, the demand for rental properties continues to rise. This creates a favourable environment for landlords, who can benefit from both high rental yields and potential capital appreciation.
The Future Outlook for Rental Yields in the UK
Looking ahead, the outlook for rental yields in the UK remains positive, particularly in the North. While the gap between northern and southern regions may be narrowing, the North still offers the most attractive rental returns for property investors.
Northern regions like the North West, North East, and Yorkshire and Humberside benefit from ongoing regeneration efforts. Additionally, these areas have rising tenant demand and relatively affordable property prices. Consequently, they are expected to remain popular with landlords. Therefore, investors should closely monitor these regions, as they consistently outperform the national average in rental yields.
For those seeking investment opportunities in high-yielding areas, it’s essential to consider both current market conditions and future growth potential. WInvestors can target major cities like Manchester and Liverpool for high returns. Alternatively, they can explore up-and-coming towns like Stockport and Preston.
Conclusion
In conclusion, the North West and North East continue to lead in rental yields, providing landlords with some of the highest returns in the UK. These regions have shown resilience amid economic challenges, boasting rising yields and strong rental demand. While the North-South divide persists, the gap is narrowing, with southern regions gradually improving. Investors should carefully evaluate these markets to maximise their returns and capitalise on emerging opportunities.