New research from Lomond has pinpointed emerging rental hotspots across the UK, revealing significant yield improvements for buy-to-let investors as rental prices surge and house prices stabilize. Utilizing government data on rental and house prices over the past year, Lomond’s study highlights how the disparity between these metrics is reshaping investment opportunities.
Rental Growth Outpacing House Prices
Over the past year, average monthly rents across England and Wales have risen by 8.2%, sharply contrasting with a modest 2.2% increase in house prices. Consequently, the average rental yield has risen from 4% to 4.2%. The biggest regional yield increases were noted in London (+0.4%), the South East (+0.3%), and the North West (+0.3%), with the North East boasting the highest overall yield at 4.9%.
Pinpointing the Prime Locations
Lomond’s detailed analysis reveals 129 local authorities where rental prices have risen while house prices have either softened or remained static, thus enhancing rental yields beyond the average. Among the regions, notable areas include:
- East Midlands: Nottingham and Ashfield lead with increases of up to 0.6%.
- East of England: Ipswich shows a significant yield growth of 0.8%.
- London: Brent tops the list with a 1.3% increase in rental yields.
- North West: Salford shines with a 0.8% increase.
- Wales: Merthyr Tydfil outperforms with a 1.4% rise in yields.
Expert Insights
John Ennis, Chief Revenue Officer at Lomond, commented on the findings, “Despite the challenges posed by higher mortgage rates, the property market has remained resilient. With the recent Bank of England rate cut, we’re seeing renewed optimism from both buyers and sellers.” He added, “The key to maximizing returns lies in strategic investments, focusing on areas where rental growth outstrips house price movements, offering landlords enhanced yields and diversified portfolio options.”
This analysis not only underscores the dynamic nature of the UK’s property market but also serves as a strategic guide for landlords aiming to maximize their investments in the coming years.
