Rental yields achieved by landlords in the North East, North West and Yorkshire & Humber are the highest of any English region, analysis of Paragon Bank lending data has revealed.
With landlords achieving average yields of 8.13%, the North East tops Paragon Bank’s regional rental yield table, compiled using the specialist lender’s own lending data. Wales, where landlords can generate returns of 8.07%, comes in at a close second, and the North West makes up the top three due to buy-to-let properties delivering average returns of 7.84%.
Another northern region, Yorkshire & Humber, also offers yields above the England, Scotland and Wales average of 7.17%. The analysis, undertaken for Paragon’s The factors driving the buy-to-let market in northern England report, found that landlords in the region can achieve rental yields of 7.54%, placing it fourth on Paragon’s rental returns table.
Along with continued strong demand reported by landlords across the UK, a key component of the north’s yield performance is the relative affordability of property.
The Office for National Statistics’ Housing affordability in England and Wales report reveals that the most affordable local authorities in 2023 were in the North East, North West and Yorkshire & Humber.
The report authors calculate affordability by dividing house prices by gross annual workplace-based earnings. Homes purchased in England and Wales throughout 2023 commanded 8.3 and 6.1 times a full-time employee’s annual salary, respectively. Across the three northern England regions, only four local authorities had ratios above eight.
With more local authorities with affordability ratios below five than above, the North East was the most affordable local authority overall. London, where eight in 10 local authorities have affordability ratios above 12, was the least affordable region overall.
Louisa Sedgwick, Paragon Bank Managing Director of Mortgages, said: “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.”
