Data from our latest Landlord Panel research in conjunction with BVA BDRC- which focused on more recent events in Q2 2021 - showed that whilst overall rental yields remain largely positive, they have edged down slightly from the three-year high of 6.0% recorded in Q1 2021 to 5.8%. From a regional perspective, landlords operating in Yorkshire & Humber are currently achieving the highest average rental yields (6.6%), whilst those with property in Central London have seen yields fall significantly to just 3.7%.
On average, single property landlords achieve a typical yield of 5.4% vs. the 6.7% achieved by 20+ property landlords.
Research from Build-to-Let specialist, Sequre Property Investment recently analysed the average rental yield across 21 major cities in England and Wales over the past five years and found that across the nation, rental yields have averaged 5.1% per year since 2015.
Sequre’s five-year data showed that the best performing city was cited as being Manchester, with rental yields sitting at an average of 5.5% a year. Sunderland has also performed well at an average 5.4% yield per year, with Nottingham (5.3%) and Newcastle (5.2%) also putting in strong performances. Cambridge experienced the lowest average rental yield since 2015 at just 3.2%, while Bournemouth was the only other city to also slip below the 4% mark.
However, increasing yields are only part of the profitability equation for portfolio landlords. Increased complexity from a tax, regulatory, economic and lending perspective means that landlords rely even more heavily on the advice process and access to funding. In turn, advisers are looking to lenders for additional product choice and simplified criteria which allows them to better service the shifting needs of their BTL clients.
As such, here at Foundation Home Loans, we have recently made some key criteria changes to help intermediaries to offer a portfolio landlord specifically.
- We have increased the limit of the portfolio that landlords can hold with us from £3 million to £5 million, and there’s no limit to the background portfolio size.
- Streamlined underwriting – we now require less evidence regarding proof of mortgage payments and proof of income, subject to case merits and as long as the portfolio is submitted at the application stage.
- Easier uploading of portfolios over 10 properties - evidence can now simply be uploaded to our broker portal or emailed to our team to format and upload.
These criteria enhancements have been designed to support a range of portfolio landlord activities, whether for purchase or refinance purposes. I propriety remains to support you the intermediary to deliver the types of solutions which can help your landlords to develop and grow their portfolios in H2 2021 and beyond.
FOR INTERMEDIARIES ONLY