Rents in the North East deliver the highest yields across England and Wales hitting an average of 8.13%, according to Paragon Bank.
Typical rental incomes come in at £15,160 in this region on valuations of 186,520, figures from the specialist bank’s regional rental yield table show compiled from its own lending data.
Wales came a close second with rental yields of 8.07% and rental income at £18,398 on valuations of £228,068.
The North West came third with rental yields at 7.84%, on rental income at £17,814 with valuations of £227,209.
The survey says: “Along with continued strong demand reported by landlords across the UK, a key component of the North’s yield performance is its relative affordability of property.”
It reports that the North East, North West and Yorkshire & Humber contained the most affordable local authorities last year, citing the latest Office for National Statistics’ Housing affordability study.
This study calculates affordability by dividing house prices by gross annual workplace-based earnings.
Homes purchased in England and Wales throughout 2023 typically commanded ratios of between 8.3 times and 6.1 times a full-time employee’s annual salary, respectively.
However, across the three northern regions — North East, North West and Yorkshire & Humber — only four local authorities had ratios above eight.
Greater London was bottom of Paragon’s index, with rental yields of 5.56%, rental income at £41,105 on valuations of £739,166.
Just above the capitol was the South East with rental yields of 6.55%, rental income at £27,095 on valuations of £433,495.
The third worst area for rental yields was the East Midlands at 6.74%, on rental income of £20,271 with valuations of £300,557.
Paragon Bank managing director of mortgages Louisa Sedgwick says: “Our latest report draws on industry data to reveal that, during the last decade, the North of England has surpassed the South in terms of the proportion of buy-to-let home purchases.
“I think one of the reasons why the region has increasingly gained the attention of landlords is the opportunity to generate strong returns on investment.
“Demand for rented homes is high in the north, as it is across the UK, and with property that can be significantly more affordable to buy compared to southern regions, landlords are able to respond, confident that they will be able to achieve above average yields.”
