The rental market in the UK is continuing on its positive trajectory with a healthy annual 3% rise in average rents reported in February, while landlords and investors who are feeling the squeeze can look to the north to maximise their returns.
There are a range of different indices and trackers available analysing rental prices and yields across the UK, and while they may show slightly varied results, they all have one thing in common – rental growth remains healthy and the best yields can be found away from London.
The latest tracker from Your Move puts UK average rents at £857 a month as of February, which is a year-on-year rise of 3%. Regionally, the strongest rental growth was seen in the east of England and the East Midlands, both of which achieved rental increases of 2.9% over the 12-month period. Rents in the east are now slightly above the national average at £894 per month, while the East Midlands posted average monthly rents of £652.
However, the north-east and London were the only parts of the country to see average rental values fall, despite being at opposite ends of the pricing scale. In the capital, rents are by far the highest in the UK at £1,276, according to Your Move’s data, which is a dip of 0.3% annually, while tenants in the north-east are paying the least – just £535 a month, which is a 2% fall compared to February 2017.
What about rental yields?
Landlords saw roughly the same returns in February as in January, an indication that the market is relatively stable, which is good news for the sector. The Your Move research put average rental yields for property investors at 4.4% across the country, but again, the regional variations are significant.
In the north-east, despite a fall in renting costs, yields for landlords in the region are the highest in the country at around 5%. This is closely followed by the north-west, where investors can expect to receive an average yield of 4.9% – but within the region as a whole, areas such as Preston and Manchester often outperform the averages.
Meanwhile, landlords with properties for rent in London achieved yields of around 3.2% according to February’s figures, down year-on-year by approximately 0.29% – and evidence that investors who are ready to look outside the capital will find much better returns in the north of England.
Martyn Alderton, national lettings director at Your Move, said: “Areas outside of London continued their strong recent growth, with impressive performances in the east of England and the East Midlands. Landlords are also enjoying more stability than they have been in recent times.
“This suggests that a recent squeeze on landlords’ profits could be coming to an end, which is good news for those looking to invest during 2018.”