Average rental yields reach decade high in Q2

Average rental yields have reached 6.3% in Q2 2024, the highest figure for over a decade, Foundation Home Loans has found.

The firm’s landlord trends report for Q2, which surveyed 799 landlords between June and July this year, revealed that tenant demand remains robust with 82% of landlords describing it as "strong".

Foundation stated that this presents "significant opportunities" for mortgage advisers to assist their clients in leveraging these "positive trends".

Director of sales at Foundation Home Loans, Grant Hendry, said: "Average rental yields increasing, the ongoing preference for limited company ownership and high tenant demand are all encouraging trends which keep on emerging and should provide mortgage advisers with opportunity to secure business and help landlords navigate the market.

"There is clearly a significant remortgage market to target in the months and weeks ahead, with a number of the landlords surveyed outlining how they had multiple mortgages coming to an end which will need refinancing.

"In an interest rate environment which has seen some falls already, we believe the opportunity to remortgage is now greater than in the last couple of years, and we’ll see a growing cohort of landlord borrowers able to remortgage to a different lender rather than simply have to accept a product transfer."

Despite strong yields, the report revealed that 10% of landlords intend to increase the size of their portfolios in the next 12 months, while over half (55%) said that rent controls would "greatly impact their commitment to renting".

Alongside these rent controls, legislative changes, such as the removal of Section 21 which bands no fault evictions, has led to one in three (33%) landlords stating that they would consider selling their properties if controls were introduced.

Hendry added: "It is to be hoped the new Government is committed to increasing supply in the private rental sector, as it certainly requires more housing in order to meet the tenant demand that is so clearly there.

"As the market evolves, we would urge advisers to stay informed about regulatory changes such as potential rent controls and the removal of Section 21.

"By providing expert advice and comprehensive mortgage solutions, advisers can help landlords navigate these challenges and capitalise on opportunities."



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