The latest Fleet Mortgages’ Buy-to-Let Rental Barometer shows both an annual and quarterly increase in rental yields across England and Wales.
According to the report, yields were 6.5% for the first quarter of 2023, up from 6% a year ago and 6.4% in the last quarter of 2022.
Every region registered both an annual and quarterly increase in rental yield, except the North West and the South West, which saw quarterly drops of 0.1% and 0.2%, respectively.
Average rental income up at £1,345 per month, from £1,256 in the last quarter of 2022. This also represents an annual increase of £135 compared with the first quarter of last year.
In the North East, while yields remained above 8%, rents decreased to £660 from £681 last quarter, with similar trends in both the East Midlands and the South East.
Steve Cox, chief commercial officer at Fleet Mortgages, commented: “Those regions which have topped the ‘charts’ for some time, continue to perform well but it is also positive to see all other regions showing stronger yields and again it is also not surprising to see rental incomes – on the whole – also on the increase.
“Overall, the market continues to predominantly be the preserve of portfolio landlords, particularly as those with only one or two properties struggle to stay profitable given the rise in mortgage costs.
“Purchase activity has slipped slightly but is still over a third of our business and this is coming from portfolio players continuing to purchase residential property with a long-term investment horizon. We do not see that tailing off any time soon.”
Percentages, percentages mean nothing unless you can analyse the data to see what it really means.
Yes yields are up but so are arrears. Some yields are up because landlords have been lagging behind with rent increases and now woken up to realising they can get more and some of those rent increases is not the new high stupid prices.
Possession orders are up as more and more landlords are leaving the market.
We have over 150 tenants chasing one property, offering everything under the sun to get it.
We have one landlord come to us, wanting 90% increase on current market value, with no justification other than “I can ask what I like”, he was shown the door! We could have offered it to the other 149 tenants but none of them could afford it or be able to maintain payments and another statistic to add to the arrears, while we chase around like headless chickens wasting our time and resources.
Every day we receive enquiries from desperate tenants, many been with their existing landlords for many years …… now selling up.
Its not going to get worse, we have already arrived at that point. Even the local authority homeless preventions teams are in despair.
A message to all landlords, don’t be greedy. Either your tenants can afford the rent hikes or they can’t. Its that simple.
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I posted this yesterday on the story about BTL needing to increase rents to cover mortgages rates rise and responding to a poster comments how obvious rents are rising, but as many seem to only read PIE in the morning?, worth posting here today.
Not as obvious as you would think. There is a limit to how much they can rise before the tenants can’t pay and they are being stuffed with rising cost of their own.
What is missing in the story is that many a landlord may not be able to increase rents and we are seeing for many, the yield is starting to get close to non-existent, so why bother for any scraps that they may get, only to be lost if rates increase further?
Not all landlords live in the home counties region with apparent oodles of money. Those tenants that have money to pay the high rents are doing so out of necessity, otherwise it is becoming far cheaper to buy and that is very true for many parts around the UK.
A higher rate landlord paying 40% tax on gross income (criminal) a 25% to 30% increase in maintenance costs, net reduction to cover mortgage interest rises, add in all the licence fees (where applicable) and indemnity fee, plus agents charges ……….. not much left over or not worth getting out of bed for and sells up.
Any wonder why very little new BTL landlords are entering the market when stamp duty is costing 3% to 9% dependent on which part of the country and value. Add in the threatened £10,000 plus, EPC improvements required for a Band C …….. yipes who would want to jump into bed with that lot.
The meltdown has already started in many parts of the country (supply and demand is proving this) and its going to get worse AND who’s the loser, the real loser? Homeless people joining the already over crowded temporary sheltered housing. If you don’t rent, you have no comprehension of the misery!
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