Landlords are achieving nominal rental yields approaching 7% in England’s strongest markets, with Newcastle upon Tyne currently offering the highest estimated returns, new analysis reveals.
Research by The Letting Partnership puts the average nominal rental yield across England at 5.9%, based on an average property price of £293,262 and monthly rent of £1,446.
Newcastle tops the rankings with an estimated yield of 6.9%, based on an average property price of £208,589 and monthly rent of £1,206.
Portsmouth and Manchester follow on 6.5%, while Southampton and the London borough of Tower Hamlets both offer estimated yields of 6.4%. Bristol, Blackpool and Nottingham stand at 6.3%, followed by Lincoln and Kingston upon Hull on 6.2%.
LONDON RENTS TOP £3,500
The analysis also highlights the significant sums passing through the rental sector even where headline yields are lower.
Average rents in Westminster stand at £3,168 a month, equivalent to more than £38,000 a year, despite an estimated yield of 4.5%.
Kensington and Chelsea commands the highest monthly rent in the analysis at £3,596 – more than £43,000 annually – but produces an estimated yield of just 3.5%.
The Letting Partnership says the figures demonstrate why landlords using managing agents should consider not only the rents being achieved but how their rental income is handled.
PROTECTING LANDLORD INCOME
For managed properties, rent routinely passes through an agent’s client account before being reconciled and transferred to the landlord, making robust financial controls an important consideration.
The Letting Partnership COO Chris Mason says: “Yield is understandably front of mind for landlords and, as the figures show, there are still parts of the country where investors can achieve very healthy returns.
“However, generating that return is only half the equation. For landlords using a managing agent, thousands or even tens of thousands of pounds in rental income can pass through that business every year, and landlords need confidence that the same attention being paid to maximising their return is also being paid to protecting it.
“Good client accounting isn’t necessarily something a landlord sees on a day-to-day basis, but it is fundamental to a well-run letting agency. Accurate reconciliations, robust financial controls and clear processes around the receipt and remittance of client money all sit behind the rent arriving where it should, when it should.
“Landlords should absolutely be asking what an agent can achieve for their investment, but they should also be asking what systems and safeguards are in place once that money starts coming in.
“For good agents, being able to demonstrate those standards clearly is also an opportunity to differentiate themselves and give landlords greater confidence in who they are trusting with their rental income.”
