All regions in England and Wales have shown an increase in yearly rental yields in Q2 2024, revealed the latest Fleet Mortgages BTL rental barometer.
The region with the biggest rise in rental yields was the North East, which saw a 1.6% increase compared to same period last year — making it the area with the highest rental yield across England and Wales.
This was followed by West Midlands (1.4% increase), Wales (1.3%), East Anglia (1.2%) and East Midlands (1%).
The area with the lowest rental yield increase was Yorkshire and Humberside, which only saw a 0.3% year-on-year rise.
Greater London, the South East, East Anglia, and the South West have also seen a quarter-on-quarter increase in rental yields.
Overall, the total average yield for England and Wales went up by 1% compared to Q2 2023, and by 0.5% compared to the figure registered the previous quarter.
When it comes to average monthly rent per property, the highest is generated within Greater London at £2,024, followed by East Anglia at £1,594.
Meanwhile, properties located in the North East region typically see the most affordable rents, with monthly pricing of £768 on average.
According to Fleet, the yearly and quarterly average rental yield growth was expected, considering the supply and demand imbalance.
While the lender expects rental yields to dip off these high eventually, it claimed they would be sustained until the PRS could benefit from a greater number of homes to meet key demographic issues.
In terms of Fleet’s average lending figures registered in Q2, average rate across its range were 5.02% for two-year fixes and 5.52% for five-year fixes, compared to peer group average rates of 5.68% and 5.73% respectively.
Fleet’s average loan size decreased on the previous quarter, down from £196,000 to £171,000 — however, the average rental cover at loan origination continued to increase from 175% to 178%.
Property purchase business in Q2 2024 showed a noticeable increase with 42% of all applications for these transactions, compared to the longer-term quarterly trend of 30%.
In addition, 80% of all Q2 2024 applications were for limited companies and just 20% private investors.
Steve Cox, chief commercial officer at Fleet Mortgages (pictured above), commented: “While there are few surprises within this iteration of the rental barometer, it’s clear the trends we have all been seeing in the wider BTL and PRS continue to strengthen right across the board, fuelled by a continued supply/demand imbalance.
“The requirements for an ongoing strong yield are clearly not going away, particularly in a higher interest-rate environment in which many refinancing landlord borrowers are having to pay far more for their monthly mortgages than they did a few years ago.
“When it comes to mortgage pricing, it showed a clearly increase in Q2 — however, with inflation now down to target, once we have the general election out of the way, we would anticipate a base rate cut in either August or September, and swap rates will move to reflect further cuts in the not so near future.
“Overall, these latest figures are positive, and they signal further activity in the second half of the year, particularly if, as we are already seeing, pricing continues to move down.”
