Lettings agency chain Lomond has unveiled a list of “up-and-coming rental hotspots” where yields have strengthened significantly over the past year, thanks to rising rents and cooling house prices.
According to Lomond’s analysis, the average monthly rent across England and Wales has increased by 8.2%, far outpacing the 2.2% growth in house prices, resulting in average rental yields climbing from 4% to 4.2%.
Regional rental yield growth
Every region in England and Wales saw yield growth, with London (+0.4%), the South East (+0.3%), and the North West (+0.3%) leading the charge. The North East boasts the strongest overall yield at 4.9%. Lomond identified 129 local authority areas where rents have grown while house prices have either softened or remained stagnant, offering prime opportunities for investors.
Largest yield growth by region
Lomond highlighted key areas in each region where rental yields have grown by 0.4% or more over the past year:
- East Midlands: Nottingham (+0.6%), Ashfield (+0.5%), Broxtowe (+0.4%), Derby (+0.4%), Erewash (+0.4%)
- East of England: Ipswich (+0.8%), Hertsmere (+0.7%), Watford (+0.7%), Harlow (+0.6%), Stevenage (+0.6%)
- London: Brent (+1.3%), Hammersmith and Fulham (+1.2%), Westminster (+1.2%), Tower Hamlets (+0.9%), Haringey (+0.7%)
- North East: Hartlepool (+0.6%)
- North West: Salford (+0.8%), Burnley (+0.7%), Knowsley (+0.5%), Blackburn with Darwen (+0.5%), Bury (+0.4%)
- South East: Reading (+0.8%), Folkestone and Hythe (+0.8%), Portsmouth (+0.7%), Epsom and Ewell (+0.7%), Thanet (+0.6%)
- South West: Exeter (+0.4%), Swindon (+0.4%)
- Wales: Merthyr Tydfil (+1.4%), Denbighshire (+0.5%), Cardiff (+0.5%), Gwynedd (+0.4%), Neath Port Talbot (+0.4%)
- West Midlands: Birmingham (+0.4%), Solihull (+0.5%)
- Yorkshire and the Humber: York (+0.5%)
Strategic opportunities for buy-to-let investors
Lomond’s spokesperson noted that while house prices have remained stable despite higher mortgage rates, the rental market has performed robustly. This has improved rental yields for buy-to-let investors, particularly in areas where house prices have stagnated but rents have risen significantly.
“This data highlights the importance of strategic investment for landlords looking to grow their portfolios. Strong rental market performance in areas with minimal house price growth has created new opportunities that investors may not have previously considered,” the spokesperson added.
As rents rise and house prices slow, investors can find lucrative opportunities in emerging rental hotspots. With yields increasing across the UK, Lomond’s analysis underscores the importance of targeted investment to maximise returns in today’s rental market.
