Landlords in some parts of the UK are facing a squeeze on returns, with yields varying widely across regions, according to research from Octane Capital.
Data showed that Scotland had the highest yields at 6.2% over three years, with the North East and North West also performing above average at 5.2% and 5% respectively.
In contrast, the South East recorded the weakest returns at 4.1%, followed by the East of England at 4.2%.
The East Midlands averaged 4.2%, the West Midlands 4.4%, and London 4.5%.
Looking at local areas, Kensington and Chelsea had the lowest average yield at 2.8% over the last three years.
Other low-yielding areas included Richmond upon Thames (3.0%), Elmbridge (3.0%), Waverley (3.0%), and Derbyshire Dales (2.7%).
Powys in Wales and South Hams in the South West both sat at 2.9%, with North Norfolk, Rutland, and Uttlesford all at 3.1%.
Jonathan Samuels, CEO at Octane Capital, said: “Our latest research highlights the difficult reality for landlords in low-yielding parts of the market, where properties may no longer fit within ICR requirements as they approach the end of their current mortgage terms.
“For many, the result is limited refinancing options from mainstream lenders and this is where specialist finance plays a vital role.
“Bridging and short-term lending can provide the flexibility needed to manage the transition, whether that means restructuring, selling, or re-investing into stronger performing assets.”
Samuels added: “At Octane Capital, we are continuing to support landlords with fast, tailored solutions that help them navigate today’s more challenging buy-to-let landscape and low-yielding investments often form a key part of this activity.”
