It has been an extremely challenging time for the property industry in recent weeks following the country’s lockdown due to Covid-19. However, a number of UK towns have continued to provide high rental yields for UK landlords despite the ongoing pandemic, new research has revealed.
Not only have many areas of the UK achieved and maintained strong rental returns, some regions have positively thrived during the pandemic, registering increased buy-to-let yields despite the lockdown.
At first glance, the new figures show that UK rental yields have fallen, with the average national yield currently standing at 3.5 per cent – a marginal decline from the 3.6 per cent registered in December, prior to the pandemic arriving on our shores.
However, even with all the obstacles that the current landscape presents, some UK buy-to-let markets have flourished, according to new data from lettings management platform Howsy. Bradford in West Yorkshire tops the table for achieving the highest average national yield of 10 per cent… miles better than the UK average of 3.5 per cent. Gwynedd in Wales registered the second-highest average UK yield of 6.2 per cent while North Down in Ireland came a close third, with an average yield of 6 per cent.
Glasgow (5.8%), Liverpool (5.5%), Preston (5.5%), West Dunbartonshire (5.4%), North Lanarkshire (5.3%), Forest Heath(5.2%) and Manchester (5.2%) also achieved high yields, while, at the other end of the scale Kensington and Chelsea, Malvern Hills and Chiltern’s buy-to-let properties only managed to secure average yields of 2.3 per cent, making them the UK’s lowest performers.
As well as the highest and lowest performing towns for yields, the letting platform’s research has uncovered further areas of the UK where buy-to-let yields have increased despite the Coronavirus pandemic.
The largest yield increase from November 2019 to May 2020 was recorded in North West Leicestershire where average yields rose 1.4 per cent to 3 per cent. Arun, Corby and West Norfolk also enjoyed an increase of 0.8 per cent in rental yields, while North Dorset and Newark and Sherwood saw a 0.7 per cent uplift.
Kettering, Derby, Breckland and Falkirk have also secured top 10 spots for the largest pandemic rental yield uplifts with yields rising 0.6 per cent since November 2019.
By contrast, Rhondda Cynon Taf, York, Gedling, Chiltern and the Vale of Glamorgan, have seen the largest yield declines of between 1–3.5 per cent.
Founder and CEO of Howsy, Calum Brannan, commented:
“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 are 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.”
Should the nationwide lockdown continue to drag on, there may be another silver lining for buy-to-let investors. If the property market sees 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.
However, news just in that the property market has been given the green light to re-start trading following the lockdown is likely to provide a significant market boost as all the tenants planning to move can now get on with their plans and transactions. Great news for landlords and the property market.