Landlords Should Look North for the Best Rental Yields

Property investors thinking of purchasing landlord insurance on homes in the North West will be delighted with the news emanating from one of the UK’s largest loan providers.

A surprise report shows that private landlords in the North are faring better than their Southern counterparts when it comes to rental yields. Figures from leading buy-to-let loan providers, Paragon, suggest that landlords in the North West of England are performing better than landlords anywhere else in the UK when it comes to profit margins based on rental yields. The rental yield of a property is determined by the amount of rent the property brings in each year compared to the price the property investor paid for it. The Paragon report shows that landlords in the North West lead the way with a rental yield of 6.6% over the first quarter of 2012. This figure just edged them in front of landlords in the North East who averaged 6.5% and both were comfortably in front of Central London which came in with an average yield of 5.9%.

Of course there is a massive difference between the values of properties in Central London to those in the North and landlords in certain areas of the capital can expect to get three times as much rental income for a property than those in the major cities of Northern England. However, John Heron, Director of Paragon, said: “The rental yield figure is important for landlords as it gives a good indication of how well a property, and in a wider sense, a portfolio is performing. We have seen another interesting shift in the regions taking the top spots, with a more distinct North/South divide in Q1 with the North outperforming Southern landlords. Average rents in London are more than twice the national average. However, because these landlords have bigger mortgages to service, they make less profit than their Northern counterparts overall.”

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