Rental yields hold steady despite decline in landlord optimism

Landlords are losing confidence in their ability to rely on steady rental yields, research by the National Landlords Association (NLA) has revealed.

The NLA’s quarterly landlord panel for the second quarter of 2017 asked members how confident they were of future rental yields, defined as the actual percentage they received taking into account current rental income, portfolio value, any mortgage payments plus maintenance and other costs.

Optimism has dropped 15% over two years, the NLA said, down from 64% in the second quarter of 2015 to 49% now confident about being able to rely on rental yield.

The sentiment contrasts with actual rental yields achieved across the UK, which have remained around 6%.

Regionally, landlords in the East Midlands currently generate the highest rental yields at 6.9%, the panel said.

In contrast, landlords in outer London generate the lowest at 5%.

Richard Lambert, chief executive of the NLA, said: “Average rental yields have remained fairly stable over the past few years, yet there is a steady increase in landlords losing confidence in their ability to make a profit from letting property.

“This perception probably exists because many will now be feeling the impact on their businesses of greater taxation and the costs of complying with regulation, which are eating away at their profits and making it harder to provide homes.

“Like any business, the increasing value of the capital assets on your balance sheet will be of little help if you are treading the fine line between profit and loss, especially if you can’t keep up your mortgage payments in the short term.”

How does your region fare?

RegionRental Yield
East of England5.7%
East Midlands6.9%
London (Central)5.3%
London (Outer)5%
North East6.1%
North West6.4%
Scotland6.3%
South East5.6%
South West6.2.%
Wales6.2%
West Midlands6.3%
Yorkshire and Humber5.6%

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