Landlords are losing confidence in their ability to rely on steady rental yields, research by the National Landlords Association (NLA) has revealed.
The NLA’s quarterly landlord panel for the second quarter of 2017 asked members how confident they were of future rental yields, defined as the actual percentage they received taking into account current rental income, portfolio value, any mortgage payments plus maintenance and other costs.
Optimism has dropped 15% over two years, the NLA said, down from 64% in the second quarter of 2015 to 49% now confident about being able to rely on rental yield.
The sentiment contrasts with actual rental yields achieved across the UK, which have remained around 6%.
Regionally, landlords in the East Midlands currently generate the highest rental yields at 6.9%, the panel said.
In contrast, landlords in outer London generate the lowest at 5%.
Richard Lambert, chief executive of the NLA, said: “Average rental yields have remained fairly stable over the past few years, yet there is a steady increase in landlords losing confidence in their ability to make a profit from letting property.
“This perception probably exists because many will now be feeling the impact on their businesses of greater taxation and the costs of complying with regulation, which are eating away at their profits and making it harder to provide homes.
“Like any business, the increasing value of the capital assets on your balance sheet will be of little help if you are treading the fine line between profit and loss, especially if you can’t keep up your mortgage payments in the short term.”
How does your region fare?
| Region | Rental Yield |
| East of England | 5.7% |
| East Midlands | 6.9% |
| London (Central) | 5.3% |
| London (Outer) | 5% |
| North East | 6.1% |
| North West | 6.4% |
| Scotland | 6.3% |
| South East | 5.6% |
| South West | 6.2.% |
| Wales | 6.2% |
| West Midlands | 6.3% |
| Yorkshire and Humber | 5.6% |
Can anyone confirm how these yields are calculated. To give an accurate yield you have to allow all the landlords costs including management, marketing, repairs, set up costs, compliance with the multitude of Government regulations etc. For example a brand new modern terraced house with low maintenance finishes does not cost the same to run as a listed Victorian 2 up 2 down cottage where it has to be maintained at much greater expense. Are they calculated by a simple gross return/cost basis – if so they are pretty meaningless.
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I guess no one knows how these yields are arrived at then!
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I’m sure we all know who we have to thank for declining confidence and yields – the current editor of the Evening Standard.
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