Stark Regional Variations in UK Buy to Let Sector

More proof that UK rental yields are higher in the north of England than the south emerged this week when the Association of Residential Lettings Agents revealed new data. According to ARLA...

More proof that UK rental yields are higher in the north of England than the south emerged this week when the Association of Residential Lettings Agents revealed new data. According to ARLA rental yields in the North East and North West of England hit 5.7% and 6% respectively in August, making them the highest in the UK.

This tracks with data from LSL Property Services, the largest lettings agency network in the UK, which also found rental yields higher to the north of England than the south in August. However, according to LSL rental yields in the North West were the highest at 7.3%, followed by the Humber at 6.7%, while the North East was around about the level of the south and much of the rest of the country at 5.2%.

Meanwhile London continues to set the bar for capital value returns, while the North East and the Midlands remain at the opposite end of that scale. According to ARLA the average value of a rented house in Central London stands at £1,251,000 compared to £175,000 in the North East and £172,000 in the Midlands.

Ian Potter, Managing Director of ARLA said: "Our data shows that the North West is presently showing the highest return on rental investment. But these figures show the private rented sector is experiencing the same regional variations as the sales market, and therefore investors should move with caution.

"Properties in Central London are outperforming the South East region as a whole in terms of the capital asset value of buy to let properties. Indeed the South East region, excluding Central London, saw a sharp fall in the values of buy to let flats of 2.2 per cent over the quarter, showing that recovery in property prices following the recession is still limited to the capital's most in-demand postcodes."

- Friday 05 October 2012

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