Rental yields rose from 7.12% in March to 7.22% in April – reversing the downward drift seen over the past 6 months, Paragon's April buy-to-let index reveals.
Paragon says the rise in yields occurred on the back of significantly higher rents achieved by landlords, which rose by 6.0% to £9,651 – a higher percentage than the growth in property values, which were up 4.5% this month.
John Heron, managing director of Paragon Mortgages, says: “With demand for rented accommodation from tenants steady or growing in many areas, landlords have been able to achieve higher rental yields, notwithstanding the continued rises in property values we've been seeing recently.”
After an increase of 3.0% in February, last month's rise of 4.5% takes average property prices paid by landlords to £133,658 - up by 8.3% over the past quarter, from December's figure of £123,372.
The index shows that the highest overall return occurred in the East Midlands, where landlords have generated a return of 55.6% on a typical property bought 12 months ago, while Wales and East Anglia also produced returns in excess of 40%, 47.2% and 45.3%.
Rental incomes rose from £9,105 in February to £9,651 in March, an increase of 6.0%, and are 11.0% higher than the figure of £8,696 one year ago. Five out of 10 regions saw yields rising, with Greater London up from 6.42% to 6.73%, the South East up from 6.45% to 6.62%, the East Midlands up from 7.32% to 7.46%, East Anglia up from 7.15% to 7.27% and Yorkshire & Humberside up from 8.09% to 8.16%.
The North saw yields steady at 8.93%. Yields slipped in Wales to 7.46%, the North West to 8.33% and the West Midlands to 7.72% – with all the declines seen in lower than average yielding regions.
Paragon says the highest yielding regions continue to be the North and North West, which are also the regions with the lowest average house prices. The South East took over from Greater London as the part of the country with the lowest yield, although both regions saw healthy rises in yield, rising from 6.45% to 6.62% in the South East, and from 6.42% to 6.73% in Greater London.