Investor returns in East Anglia have rapidly increased over the past year, rising by 1.4% to bring investors annual returns of 6.8%.
These improved returns have been driven by Norwich, Peterborough, and the outskirts of Greater London, Fleet Mortgages Rental Barometer shows.
Fleet suggested this could be as a result of changing behaviours from tenants, more working from home, and a widening of searches to incorporate larger properties and garden space outside city centres.
Yields worsen nationally
East Anglia’s improved rental yields defy a national trend, as yields across England & Wales have worsened by 0.6% to 5.6% between Q4 2020 and Q4 2021.
In the East Midlands for example they’ve fallen by 1.8% in a year to just 5.4%.
Greater London’s yields are the worst, at 4.5% in Q4 2021, down from 5.0% in the same quarter of 2020.
North East still has the best yields
Despite yields worsening by 0.1% year-on-year the North East still has the best rental yields, at 7.9%. The region has now had the best yields for six quarters.
Wales is the next best location for yields (7.1%), followed by Yorkshire and Humberside (7.0%).
Another area where rental yields significantly improved was the West Midlands, where they rose by 0.6% year-on-year to reach 6.7%.
They also inched up by 0.1% to 5.5% in the South East.
Average Rental Yields
y/y change
Region
2020 Q4
2021 Q4
North East
8.0%
7.9%
–0-0.1%-%
Wales
7.2%
7.1%
-0.1%
Yorkshire and Humberside
7.6%
7.0%
-0.6%
East Anglia
5.4%
6.8%
1.4%
West Midlands
6.1%
6.7%
0.6%
North West
7.4%
6.2%
-1.2%
South East
5.4%
5.5%
0.1%
East Midlands
7.2%
5.4%
-1.8%
South West
5.6%
4.7%
-0.9%
Greater London
5%
4.5%
-0.5%
England & Wales (Total)
6.2%
5.6%
-0.6%
Steve Cox, chief commercial at Fleet Mortgages, said: “Three regions continue to offer 7%-plus yield and the North East retains its top spot, although Wales has shown a significant increase over the year as tenant demand continues to improve there, possibly as a result of the growing working from home trend.
“East Anglia has posted the biggest year-on-year increase, while conversely both the North West and East Midlands fell by the most. However, these drops are from points above a 7% yield and again we anticipate they will stabilise as the year continues.
“In terms of how this might impact landlord activity, it looks increasingly positive for 2022 particularly as professional investors review the recent capital increases in their properties and make the most of them via refinancing in order to secure the deposits required for new purchases.
“2022 has been described as a big year for remortgaging in the buy-to-let space, and that looks highly likely, but it will be remortgaging with a reason for existing landlords, who tend to capital raise in order to secure the funds they need for portfolio growth.
“With these yield figures showing a strong yearly return possible across most regions of the UK, and with house prices likely to continue on an upward trajectory due to a continued lack of supply, property investment and buy-to-let is likely to retain its allure.”
