Buy-to-let hotspots where yields are climbing despite the pandemic market lockdown


Research from lettings management platform Howsy has revealed the pockets of the UK rental market currently registering the strongest yields, as well as those that have seen yields increase despite the current pandemic.

The figures show that the current average UK rental yield sits at 3.5%, having seen a marginal decline from the 3.6% registered prior to the pandemic hitting in December of last year.

However, even with the obstacles that the current landscape presents, there are still a number of buy-to-let pockets providing strong returns for landlords who want to invest in property.

Bradford is home to the highest average yield at 10%, far better than the UK average, with Gwynedd (6.2%) and North Down (6%) also home to an average yield of 6% or more.

Glasgow, Liverpool, Preston, West Dunbartonshire, North Lanarkshire, Forest Heath and Manchester also rank high, while at the other end of the scale Kensington and Chelsea, Malvern Hills and Chiltern are home to the UK’s worst average yields at 2.3%.

Despite the problems posed by the current pandemic, predictions of house prices falling while rental demand remains high could mean an increase in yields, as the investment cost to return ratio becomes more favourable.

But even before this materialises, there are patches of the UK buy-to-let market that have already seen yields increase since November.

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The largest has been in North West Leicestershire, where yields are up 1.4% during the pandemic. Arun, Corby and West Norfolk have also enjoyed an increase of 0.8% in rental yields, with North Dorest and Newark and Sherwood seeing a 0.7% uplift.

Kettering, Derby, Breckland and Falkirk also make the top 10 for largest pandemic rental yield uplifts.

Rhondda Cynon Taf, York, Gedling, Chiltern and the Vale of Glamorgan, however, have seen the largest declines of between 1%-3.5%.

Founder and CEO of Howsy, Calum Brannan, said: “The current lockdown has seen the Government introduce measures such as buy-to-let mortgage holidays and a ban on tenant evictions and this has understandably caused many buy-to-let investors to hesitate.

“But despite this overall air of market uncertainty, tenants still need to find rental properties and so it continues to be business as usual for many landlords and those agents who have adapted to a more digital mode of operations.

“There’s also still a large number of areas where potential and existing landlords can secure favourable yields much higher than the national average, with some areas still seeing an uplift in yields despite the spread of the coronavirus.

“As the nationwide lockdown continues to drag on, there may be another silver lining for buy-to-let investors. Should the property market see prices fall, the cost of investing will be lower, boosting profit margins in a sector that has had it tough of late due to Government squeezes on profitability.”

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