Rising rental yields signal a period of opportunity for property investors

Research from property investment platform Sourced Franchise shows that UK rental yields have seen a marginal increase in the past year as cooling house prices may present good investment opportunities for buy-to-let landlords. As such, they’ve revealed where the best places to invest are.

Sourced Franchise has analysed UK house prices, rent values, and yields in June 2022 and June 2023 to see how a difficult economic environment has impacted buy-to-let investment returns. 

The UK is enduring a difficult economic period with rising mortgage rates causing pain and concern across the board – homeowners, landlords, and tenants. But while it might seem like a bad time to be investing in rental property, cooling house prices and rising rent values actually provide a potential opportunity for proactive investors. 

The latest data shows that the current average yield in the UK is 5.2%, marking a 0.4% increase since this time last year.

The strongest yields, which indicate the best places to invest right now, are currently available in Scotland (5.9%), while other regional hotspots include Northern Ireland (5.7%), the North West (5.5%), Yorkshire & Humber (4.9%), and London (4.7%).

Scotland also leads the way in terms of annual yield increases, rising by 0.64%.

With 0.49% growth, London is also performing well, as are Wales (0.35%), the West Midlands (0.34%), North West (0.34%), and Yorkshire & Humber (0.34%).

The South East is the only region to have recorded negative numbers, with the current yield of 4% marking an annual drop of -0.02%.

Chris Kirkwood, Sourced Franchise Director, comments: “Economic turmoil can present great opportunities for investors who are willing to take calculated risks, and the UK’s current environment is the perfect example. 

“Yes, the economy is struggling and rising mortgage rates are causing widespread concern on the housing market, but with house prices likely to fall further before they climb again, and rent values climbing at pace, buy-to-let landlords who can afford to take on current mortgage deals would be wise to pounce when the right properties come to market in the right locations.

“The same theory can be applied to all corners of the property industry, commercial and residential. The market is always cyclical and slumps and followed by growth and peaks. It’s moments like this that see great investors zig while everyone else zags, and therein lies the genius.”