Rental yields hit two-year high

Rental yields in Britain have reached their highest levels in two years. According to Kent Reliance for Intermediaries’ Buy to Let Britain report, the average rental yield in the UK currently stands at 4.5%, the highest rate since Q1 of 2017.

In London, yields have reached their highest level since the end of 2015, peaking at 4.1%. The increase in rental yields in the capital is being pinned partly on a fall in house prices.

Britain’s rental sector is currently valued at £1.3 trillion. Due to a fall in property prices, the UK’s private rented sector witnessed a significant increase in 2018 of £6 billion.

In 2018, the average rental cost increased by 0.3%. With growth now accelerating to 1.3% a year, the average cost of renting a property in Britain stands at a new record of £896 per month.

Increasing rental yields presents greater opportunities for landlords to profit from their buy-to-let venture.

Further good news for landlords is that wages are also currently rising at 3.4% compared to 2.9% in 2018, meaning many tenants are living with improved finances.

Andy Golding, chief executive of OneSavings Bank, commented on the changes occurring in Britain’s buy-to-let market.

“The positive news is that for those landlords looking to expand their portfolios, underlying market conditions seem to be changing. Yields are climbing as rents rise faster than house prices, providing further opportunities for committed investors.

“Professional landlords haven’t stood idle either. Holding property in a limited company structure is increasingly popular for landlords adding to their portfolio, while many are also remortgaging to fix outgoings by taking advantage of historically low rates,” Golding added.

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