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Helping landlords to achieve strong yields and capitalise on growing tenant demand
A huge number of factors continue to weigh heavily in the thinking of both potential and existing landlords, no matter how large or small their expectations or portfolios.
The significance placed on location has always been evident across the residential and buy-to-let markets and regional variations can have a huge impact on house prices, yield and tenant demand.
The last two factors, yield and tenant demand will always remain at the forefront of any successful buy-to-let investment property anywhere within the UK. So, with that in mind, let’s take a look at the latest BVA BDRC Landlord Panel research for Q3 2022 to dig a little deeper into the current performance of these important areas. Starting with yield.
After a dip in Q1, the average achieved rental yield is reported to have edged up for the second consecutive quarter, to 5.8%.
Breaking this down, landlords with multi-unit blocks of flats achieved the highest rental yields in Q3, with an average of 6.3%. HMOs also achieved a higher than average yield of 6.2%. Linked to this, students and migrant workers provided the strongest average yields of any tenant types at 6.7%.
On a regional basis, landlords operating in the West Midlands, North East, Yorks & the Humber, the North West and East Midlands attained the highest rental yields in Q3, with all generating average yields in excess of 6% this quarter, higher than landlords in general. Landlords operating in Outer and Central London continued to generate the lowest average yields (circa 5.0%) due to higher property prices. It also remains the case that over 1 in 4 landlords don’t know their rental yield or are unsure how to calculate it (29%).
Turning our attention to tenant demand, the proportion of landlords reporting increased tenant demand rose in Q3 ’22, with 65% of landlords reporting an uptick. A greater proportion of landlords reported a ‘significant increase’ in demand in the last three months (+4% vs Q2’22), while only 1% said they have seen tenant demand decrease to any extent. Larger portfolio landlords (11+ properties) continued to be much more optimistic, with 79% reporting increasing demand vs. 61% of landlords with 1-10 properties.
Regionally, landlords operating in the South West of England reported an increase in tenant demand, with 88% saying it had risen over the last 3 months (vs. 82% in Q2 ‘22). Yorkshire & The Humber became the region with the lowest proportion of landlords seeing increasing demand (at 74%)
In order to help landlords clients achieve strong yields and capitalise on growing levels of tenant demand, intermediary partners need to be aware of the current options on offer. This isn’t always easy in the wake of market conditions but rest assured that our dedicated team are always on hand to support you and your clients.
If you have any portfolio landlords who you feel may benefit from our expertise, we would love to help. Please request a call back here today
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