How are rental yields going to change over the next four years? It’s a question that’s taken on extra significance of late, with George Osborne rolling out his buy-to-let tax grab and sensationalist newspapers claiming that investors are withdrawing from the sector at pace.
Well, to accurately answer the question of rental yield forecasts we set about finding out just what they’re likely to do between now and 2020. By combining our expert insight and knowledge with stats from third party resources (including RICS, LSLS, LendInvest, Move With Us, Homelet, Hamptons International and more) we’ve forecasted just how yields are going to shift across England and Wales by 2020.
Our figures are for gross rental yield, to remove any capital growth – which should always be viewed as a nice bonus but not a source of regular income. These figures show cumulative rental yield growth between 2016 and 2020.
Interestingly, our forecast shows a real emergence for the oft-mooted Northern Powerhouse. Whilst house prices will still remain high across London and the South East, yield percentages will be healthiest across the North of England and the Midlands.
Liverpool, Manchester, Leeds, York and Birmingham are set to see the biggest rental yield growth over the coming years, followed by Sheffield, Nottingham, Leicester, Coventry and Carlisle. In the South, Reading looks the best bet for rental yields, along with Cardiff and the surrounding areas. East London, to the north of the River Thames, is set for the biggest jump in the capital, around Stratford, Hackney, Whitechapel and Canary Wharf. Sitting pretty in mid-table are Bristol, Portsmouth, Luton, Sunderland and Oxford.
Meanwhile at the other end of the scale, Plymouth, Great Yarmouth and Bath may offer high rental values, but their average yield percentage is set to be among the lowest in England and Wales. Of course nobody knows what lies ahead, and our forecast is exactly that – an estimation (albeit one that took a poll-of-polls from numerous knowledgeable sources). However, it should clearly show where the hotspots are for savvy landlords to keep in mind for their next investment.