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North West provides highest rental yields

18th April 2012

The North West of England could be the best part of the UK to invest in buy-to-let properties, new figures reveal.

Research by mortgage provider Paragon show that rental yields in the region - which signify a property's annual rental income as a proportion of its current value - averaged 6.6 per cent in the first quarter of 2012, an increase from 5.9 per cent in the previous quarter.

Another northern region provided the second-highest yields during the quarter, with the North East achieving an average return of 6.5 per cent.

The best performing southern region was the South West with yields of 6.4 per cent, putting it in third place.

Yields were lowest in the East and West Midlands and Scotland, averaging just 5.5 per cent for all three regions.

John Heron, director of Paragon Mortgages, said:  "We have seen another interesting shift in the regions taking the top spots, with a more distinct north/south divide in Q1 with the north outperforming their southern counterparts.

"Tenant demand continues to grow and fluctuate in certain areas of the country, at different times. So I suspect we will continue to see movement in the yield table in the months to come."

However, the first quarter of the year proved to be a successful period for the private rented sector as a whole, with the overall average yield achieved by landlords standing at 6.2 per cent for the period, up from 5.9 per cent in Q4 of 2011.

And with buy-to-let properties currently generating such high returns, owners may be wise to protect their investments by taking out landlord buildings insurance.

This will help landlords cover the cost of accidental or malicious damage to the property by tenants or guests, as well as a host of other common risks to private rented homes.

Posted by Jason Randall

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