Independent research commissioned by specialist buy-to-let lender Paragon Mortgages, has revealed that rental property in the East Midlands generated an average yield of 6.4% during quarter four.
The South East (excluding London) came in second place with a yield of 6.1%, which was followed by the South West which generated a yield of 6.0%. The high yields generated in the South reflect the strong level of demand in these areas for rental property.
Yields, a property’s annual rental income as a proportion of its current value, are an important factor for landlords when making a property purchase decision.
Paragon Mortgages worked with independent researchers BDRC Continental in conjunction with the NLA, to survey more than 500 landlords – a percentage of which are Paragon Mortgages and Mortgage Trust customers - during the last quarter of 2011.
Paragon customers who took part in the survey reported an average yield of 6.9% for Q4 - higher than the market average of 5.9%.
The survey also revealed that the highest yielding property type is a detached house, generating an average yield of 6.6%. This was followed by terraced houses and HMOs which generated yields of 6.1% and 6.0% respectively.
John Heron, Managing Director of Paragon Mortgages, said:
“The yield a landlord’s rental property generates is a key indicator of how well the property is performing and is an essential part of the landlord’s overall business plan.
“It is interesting to see the shift in the regions that are taking the top spots in the yield table and the fact that the East Midlands took first place from the West Midlands.
“As we progress into 2012 I suspect we will continue to see changes in yield patterns and how different regions fair against each other, with demand still at a peak I believe landlords will continue to achieve healthy yields in the coming months.”
1. East Midlands: 6.4%
2. South East (excluding London): 6.1%
3. South West: 6.0%
4. London (outer): 5.9%
5. North West: 5.9%
6. Wales: 5.8%
7. East of England: 5.7%
8. West Midlands: 5.7%
9. London (central): 5.6%
10. North East: 5.2%
11. Scotland: 5.2%
12. Yorks & Humber: 5.2%
