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New Housing Market Data Shows Gains in North West Rental Yields

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    North West Housing Market Sees 1.1% Yield Growth in Q4 2023

    The most recent data from the Fleet Mortgages Buy-to-Let Rental Barometer, a reputable source for tracking yields in various regions of England and Wales, has been released.

    Following a subdued 2023 for the housing market, the main positive for many landlords was the massive uptick in tenant demand and the rental price hikes that came with it.

    But which areas enjoyed the highest growth in yields? And which ones experienced the sharpest decline?

    As a property investor, it’s essential that you know which areas offer the best yields, as this will affect your income in the long run. If you are a portfolio landlord with multiple homes, you’ll want to ensure your properties are as yielding as possible to make money from property.

    Let’s look at some of the UK’s regional yield figures and see what they mean for UK buy-to-let property investment.

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      Which UK Regions Performed the Best and Worst for Rental Yields in Q4 2023?

      In Q4 2023, there was a slight annual rise of 0.3%, bringing the average yield to 6.9% in England and Wales.

      Despite this overall increase, three regions—namely, the North East, East Midlands, and the South West—experienced a marginal decrease during this period.

      Wales emerged as the leader, securing the top position with a substantial 2.2% yearly growth in rental yields, reaching 8.9% overall. This figure also represented a 1.7% uptick from Q3 2023.

      The North West, Yorkshire, and Humberside closely followed suit, witnessing an annual increase of 1.1% in rental yields.

      Read More: For more investment property advice, feel free to check out our guide on how much money you need for property investment in the UK.

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      What Can Buy-to-Let Investors Expect for UK Yield Growth 2024?

      Fleet Mortgage’s Q4 figures present a deviation from the trend observed in the previous two quarters, as three regions experienced a slight decline in average annual rental yields. After all, unprecedented tenant demand had pushed yields up for most of 2023.

      While the average 6.9% figure signifies a robust rental yield, specific regions, such as Wales, the North West, Yorkshire and Humberside, have witnessed significant increases in rental yields. This likely reflects an ongoing scarcity of supply in comparison to the overall demand from tenants.

      Looking ahead to 2024, there is an expectation that rents may experience a slight decline from their current highs. However, the imbalance between the number of potential tenants and the availability of properties should continue for the time being while many buyers wait for interest rates to lower before entering the market. We recommend reading the RWinvest best area to invest in property guide for 2024, or the best property investment fact sheet in order to learn more about this sector.

      The challenges faced in 2023, particularly regarding landlords expanding their portfolios due to a substantial rise in mortgage rates, have eased in recent weeks. Mortgage lending has seen improvement. Lower rates and the ability to meet affordability criteria may make it easier for some investors to enter the property market this year.

      According to Fleet’s analysis, higher landlord activity usually happens when mortgage rates hover around 5.0%. Given the current trajectory, it is plausible that more buying may occur if landlords can navigate current housing supply issues. We may also see more activity if the government announces favourable pre-election buy-to-let stamp duty regulations in the March Budget.

      Overall, the beginning of the year has been more favourable than the challenges witnessed in the spring and summer of 2023. While a substantial boost in buy-to-let activity is not expected, there is a greater potential for such activity compared to most of the previous year.

      Read More: Take a look at our guide on the pros and cons of buying a rental property for more buy-to-let advice.

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        Should Buy-to-Let Investors Consider Purchasing Property in the North West?

        While Wales enjoyed the biggest yield increase in Q4 2023, buy-to-let investors may want to watch the North West property market. According to the latest Savills cross-sector survey, the North West is forecast to enjoy a 9.2% return in the buy-to-let market, making it one of the few property investment sectors expected to earn over 8% returns in the next month.

        With rental yields increasing and the North West offering good-value property prices, this region could provide a substantial return on investment.

        Discover More: For more information on specific buy-to-let areas in the UK, check out some of our buy-to-let area guides.

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        Dale Barham

        Dale is a property content writer at RWinvest. Keeping a close eye on the UK property market, Dale helps our readers stay informed and up to date on the latest market news and statistics.