With landlords achieving average yields of 8.13%, the North East has topped Paragon Bank’s regional rental yield table.
The study, compiled using the specialist lender’s own data, also revealed that Wales came in at a close second, with landlords generating returns of 8.07%.
The North West rounded out the top three, due to buy-to-let (BTL) properties in the area delivering average returns of 7.84%.
Yorkshire & Humber also offered yields above the England, Scotland and Wales average of 7.17%, at 7.54%.
The Office for National Statistics’ ‘Housing affordability in England and Wales’ report revealed that the most affordable local authorities in 2023 were in the North East, North West and Yorkshire & Humber.
The report authors calculated affordability by dividing house prices by gross annual workplace-based earnings.
Homes purchased in England and Wales throughout 2023 commanded 8.3 and 6.1-times a full-time employee’s annual salary, respectively.
Across the three Northern England regions, only four local authorities had ratios above eight.
With more local authorities with affordability ratios below five than above, the North East was the most affordable local authority overall.
London, where eight in 10 local authorities have affordability ratios above 12, was the least affordable region overall.
Louisa Sedgwick, Paragon Bank managing director of mortgages, said: “Our latest report draws on industry data to reveal that, during the last decade, the North of England has surpassed the south in terms of the proportion of buy-to-let home purchases.
“I think one of the reasons why the region has increasingly gained the attention of landlords is the opportunity to generate strong returns on investment.
“Demand for rented homes is high in the north, as it is across the UK, and with property that can be significantly more affordable to buy compared to southern regions, landlords are able to respond, confident that they will be able to achieve above average yields.”
