Rental yields have seen a marginal increase in the past year, as cooling house prices present investment opportunities for buy-to-let (BTL) landlords, research from Sourced Franchise has found.
Sourced Franchise analysed house prices, rent values, and yields in June 2022 and June 2023 to see how a difficult economic environment has impacted BTL investment returns.
Rising mortgage rates have caused issues for homeowners, landlords, and tenants, but cooling house prices and rising rent values could provide an opportunity for proactive investors.
The average yield in the UK was 5.2% in June 2023, marking a 0.4% increase since this time last year.
The strongest yields were available in Scotland (5.9%), Northern Ireland (5.7%), the North West (5.5%), Yorkshire & Humber (4.9%), and London (4.7%).
Scotland also lead the way in terms of annual yield increases, rising by 0.64%.
With 0.49% growth, London also performed well, as did Wales (0.35%), the West Midlands (0.34%), North West (0.34%), and Yorkshire & Humber (0.34%).
The South East was the only region to record negative numbers, with the yield of 4% marking an annual drop of -0.02%.
Chris Kirkwood, director at Sourced Franchise, said: “Economic turmoil can present great opportunities for investors who are willing to take calculated risks, and the UK’s current environment is the perfect example.
“Yes, the economy is struggling and rising mortgage rates are causing widespread concern on the housing market, but with house prices likely to fall further before they climb again, and rent values climbing at pace, buy-to-let landlords who can afford to take on current mortgage deals would be wise to pounce when the right properties come to market in the right locations.
“The same theory can be applied to all corners of the property industry, commercial and residential.
“The market is always cyclical and slumps and followed by growth and peaks.
“It’s moments like this that see great investors zig while everyone else zags, and therein lies the genius.”
