Landlords in the North East, North West, and Yorkshire & Humber are achieving the highest rental yields in England, according to a recent analysis of Paragon Bank’s lending data. These regions have become a hotspot for buy-to-let investors, with the North East taking the top spot with average yields of 8.13%. The data highlights the growing attractiveness of northern regions, driven by the affordability of property and strong tenant demand.
Northern regions outperform national average
The Paragon Bank report, The factors driving the buy-to-let market in northern England, reveals that landlords in the North East are achieving the highest returns, with average yields of 8.13%, followed closely by Wales at 8.07%. The North West also ranks highly, with buy-to-let properties generating an average yield of 7.84%.
Yorkshire & Humber, another northern region, offers yields of 7.54%, placing it fourth in the rankings. All these regions outperform the national average yield of 7.17%, solidifying their status as prime areas for property investors seeking better returns on their investments.
Paragon Bank’s Managing Director of Mortgages, Louisa Sedgwick, commented, “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.”
Affordability drives investor interest
One of the key reasons for the strong performance of northern rental markets is the relative affordability of property compared to the south. According to the Office for National Statistics’ (ONS) Housing affordability in England and Wales report, local authorities in the North East, North West, and Yorkshire & Humber are among the most affordable in the country.
In these regions, house prices are generally lower, which translates to more accessible buy-to-let opportunities. The report notes that in 2023, homes in England were priced at an average of 8.3 times a full-time employee’s annual salary, while in Wales, this figure was 6.1 times. However, northern regions boast numerous local authorities where house price-to-income ratios are under five, making them significantly more affordable compared to London, where eight out of 10 local authorities have ratios above 12.
This affordability is particularly appealing to landlords looking to expand their portfolios in areas where property prices are lower, but rental demand remains strong. Sedgwick noted, “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.”
High demand fuels northern rental market
In addition to affordability, high tenant demand is another critical factor contributing to the strong rental yields in northern England. With continued demand for rental properties reported across the UK, the northern regions have become increasingly attractive for landlords seeking stable investments with good returns.
The Paragon Bank report highlights the shift in landlord attention from the south to the north over the past decade. The availability of more affordable homes in northern England, combined with robust demand for rented accommodation, is driving this trend. As a result, buy-to-let home purchases in the north have outpaced those in the south in recent years.
As demand continues to outstrip supply in many areas, rental prices have been rising, further boosting yields for landlords. However, this has raised concerns about affordability for tenants, particularly in an already competitive rental market.
The combination of affordability and rental demand has made the North East, North West, and Yorkshire & Humber prime regions for buy-to-let investors, providing a strong opportunity for those looking to generate higher-than-average returns.
A promising future for northern buy-to-let
For UK landlords and property investors, the data paints a clear picture – the north of England offers substantial opportunities for those seeking to maximise their rental yields. With the most affordable properties and the highest demand, northern regions are increasingly at the forefront of the UK’s buy-to-let market.
As Sedgwick summed up, “The north of England has surpassed the south in terms of the proportion of buy-to-let home purchases.” With property investors continuing to turn their attention northward, the trend shows no signs of slowing down, offering potential rewards for those who seize the opportunity.
