BTL properties in the north east of England offer the highest average rental yield compared to other regions, sitting at 7%, revealed the latest data from Paragon Bank.
Landlords in Yorkshire & The Humber and the East Midlands also achieve similarly high average yields of 6.6% and 6.5% respectively.
Meanwhile, landlords in London recorded more modest returns — those in outer London saw the lowest average yields of 5.2%, while landlords in central London achieved an average yield of 5.7%.
The research, for which 800 landlords were surveyed, also revealed that HMOs have the potential to generate higher rental yields compared to single self-contained properties — with the former achieving 7% average yields compared to 5.8% achieved by single self-contained properties.
Richard Rowntree, managing director of mortgages at Paragon Bank (pictured above), said: “Against what has been a challenging economic backdrop, landlords are naturally looking for ways to maximise returns, but they are also attempting to mitigate the impact of a tax burden that has increased in recent times.
“Alongside their yield generation potential, HMOs appeal to investors because of strong demand for affordable homes, particularly in areas where tenants would perhaps not be able to afford to buy or rent a whole property.
“While strong yields are good news for landlords, we recognise that this rental inflation poses a very real challenge for tenants, so are buoyed by reports of improving levels of housing stock in the sector.
“This is because addressing the imbalance between supply and demand is central to keeping rents at an affordable level, and also means that tenants have more choice when choosing a home.
“A thriving market, where landlords can operate profitable lettings businesses, is crucial in encouraging investment in this stock and making more homes available for renters.”
