Data from a leading mortgage lender shows landlords are achieving their strongest rental yields in more than a decade.
According to Aldermore Bank, the typical yield has risen to 6.6%, up from 5.9% last year and the highest since 2014. The survey of 872 landlords also found nearly nine in ten (89%) now make a profit from their lettings – the best result since before the pandemic.
Regional strength
The North West is the top-performing region, with average yields of 7.4%, followed by Yorkshire & the Humber at 7.2%, with their affordable house prices and consistent rental demand ensuring both regions are firmly on investors’ radars.
Further south, returns are also improving. In the South East, steady rent growth and slower buying activity are helping to narrow the gap with northern markets.
Strong returns amid reform
The rise comes as the Renters’ Rights Bill becomes law and the government hints at potential tax adjustments in the next Budget. Even so, Aldermore’s data suggests most landlords are navigating the changing landscape effectively.
Jon Cooper, the bank’s director of mortgages, said the results “paint an interesting picture, one that might seem contradictory at first glance.”
“While the average landlord is seemingly doing the best since pre-pandemic days when it comes to profits and yields, what’s increasingly obvious is that many landlords still feel jittery about what the next few years will bring.”
Despite those jitters, rental performance remains firm, supported by limited housing stock and a resilient jobs market.
Confidence returning
And that stability is now feeding through to confidence. More landlords now describe conditions as ‘healthy’ than at any point since 2020, and most plan to hold onto or grow their portfolios. Many also expect rents to edge up again this year, offsetting the impact of higher borrowing costs.
Cooper said the new rules could deliver long-term benefits for both sides of the market: “Many of the measures could boost trust and satisfaction among tenants, leading to longer tenancies, fewer void periods and fewer rent arrears. Upgrading properties could also mean higher property values.”
Resilience rewarded
Aldermore’s findings underline how the private rented sector has weathered recent challenges. Landlords who have stayed the course are now seeing stronger returns and better yields across most regions.
While questions remain about future tax policy, the direction of travel is clear: those focusing on quality, well-located homes are being rewarded with the best returns in more than a decade.
As Cooper concluded: “Landlords are experts at overcoming regulatory hurdles, and I’m confident they will adapt their strategy, knuckle down and thrive under the new rules.”
