BTL rental yields remain ‘largely flat’

Buy-to-let (BTL) rental yields have remained “largely flat” and are up by just 0.1% year-on-year, according to new research from Sourced Capital.

The peer-to-peer investment platform revealed that rental yields in England have fallen by 0.1% while regionally, London has seen an even greater decline with a drop of 0.2%.

However, Sourced Capital suggested this hasn’t been the case everywhere, and found that the North-East has seen an annual increase of 0.12% while on a local level, Corby has seen an uplift of 0.7% on an annual basis. Charnwood, Newcastle and Exeter have also seen positive growth with jumps of 0.5%.

The research also showed that Harlow in Essex and the Orkney Islands have each enjoyed a 0.4% increase, along with Ealing, which enjoyed the largest increase of all London boroughs.

While Glasgow has seen a very marginal decline on an annual basis, Sourced Capital said the current average rental yield of 7.87% remains the strongest in the UK BTL sector.

“Turning a profit in the BTL sector remains a tough ask with a number of government changes denting profitability and yields remaining largely flat,” Sourced Capital managing director, Stephen Moss, commented.

“With COVID-19 presenting additional hurdles such as rental arrears and longer void periods, many are now turning to alternative options such as the peer-to-peer sector for a safer, more hands-off investment. 

“However, that’s not to say that a BTL property won’t make a great investment should you place your money in the right pockets of the market. BTL returns are based on fine margins and so an annual increase of 0.7% isn’t as insignificant as it may seem.”

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