The north of England provided the biggest jump in returns for buy-to-let landlords in the final quarter of last year as demand from renters continued to heavily outstrip supply in the region.
According to data from Fleet Mortgages’ newly launched buy-to-let index, the returns from rent as a percentage of the property value grew 2.6% in the final quarter of last year.
Landlords with properties in the north of England achieved yields of 9.1% on average in the fourth quarter of 2019, up from 6.5% in Q4 2018.
Those with properties in Greater London saw yields edge up 0.3%, from 4.8% to 5.1%, while in the South West they remained unchanged at 5.5%.
The North West was the only region to see yields drop, falling from 7.5% to 7.4% on average over the corresponding period.
Overall yield growth for England and Wales as a whole rose 0.7%, from 5.4% to 6.1%, according to Fleet.
Steve Cox, distribution director at Fleet Mortgages, said: “Clearly, the market has shifted over the past 18-24 months as landlords get to grips with the increased costs that come with private rental sector activity, in particular the phased-in changes to mortgage interest tax relief for individual landlords.
“Landlords now tend to look differently at their properties, with many converting single-tenancy properties into multi-tenant ones in order to secure better yields. These higher yields are needed in order meet those growing tax liabilities, but to also offset the increased cost of acquiring tenants and regulation. Examples of these changes include more properties being converted into self-contained flats rather than keeping the property as a larger family home.”