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Landlords in the Midlands report rising demand and strong yields

Thursday 23 August 2018

Landlords are still picking up property in the East and West Midlands despite a drop in purchasing activity in Central London and more modest reductions across the UK, a recent survey reveals.

More than four out of ten landlords in the East Midlands (42 per cent) and one third of landlords in the West Midlands (33 per cent) said tenant demand was increasing, compared with just under a quarter of all landlords (24 per cent) who indicated rising demand, according to figures from Paragon.

Rental yields for landlords operating in the Midlands were also strong, with landlords in the East Midlands reporting average yields of 6.7 per cent and those in the West Midlands achieving yields of 6.2 per cent. The North East  wasn’t far behind with the average property offering a 5.0 per cent return to landlords according to separate research by Your Move.

Rental yield measures annual rent as a proportion of a property’s value and provides a valuable way to compare the return on different properties as well as different asset classes.

Landlords operating in Central London were least likely to be buying property, with a net 16 per cent saying they had sold some property in the last quarter. But research from the UK’s largest agency Countrywide show that the proportion of London’s buy to let investors purchasing properties outside the capital has increased. 2017 saw increases of 50 per cent compared to 2011 where it was just 19 per cent. 

John Heron, managing director of mortgages at Paragon, said: “These findings highlight a big regional difference in landlord experience and buying habits. 

“Some Central London landlords appear to be scaling back a little while landlords in the Midlands continue to invest on the back of a positive outlook.”

While figures from UK Finance show that buy-to-let mortgages for property purchase have fallen by around 40 per cent overall since 2015, after tax and regulatory changes, it seems landlords in the Midlands are bucking the trend, boosted by strong economic growth in the region, a thriving higher education sector and the continued regeneration of Birmingham.

Richard Truman, Operations Manager at Simple Landlords Insurance says: “we wanted to understand our customers and find out what were their troubles, goals and future plans to help us better support landlords. 

“With this in mind we asked landlords of all shapes and sizes about the market and their plans and the results make one interesting read in our Emerging Landlord Report.“

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