The regions with the highest rental yields have been revealed, with the North East, North West and Yorkshire and the Humber leading the way.
The research by Paragon Bank found that the area with the highest rental yields is the North East at 8.13%.
It is followed by Wales, where landlords can generate average returns of 8.07%, and the North West, which stands at 7.84%.
The specialist lender analysed its own lending data to produce the results.
Average yields
It found that the average yield for England, Scotland and Wales as a whole is 7.17%.
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The regions that achieve above this yield also include Yorkshire and the Humber at 7.54%, which is ranked fourth on the list.
A key component of the strong rental yields in the North is the relative affordability of property, according to Paragon.
The Office for National Statistics’ (ONS’) Housing affordability in England and Wales report reveals that the most affordable local authorities in 2023 were in the North East, North West and Yorkshire and the Humber.
The report calculates affordability by dividing house prices by gross annual workplace-based earnings.
Throughout 2023, homes in England and Wales were bought using 8.3 and 6.1 times a full-time employee’s annual salary respectively.
Across the three regions in Northern England, only four local authorities had ratios above eight.
With more local authorities with affordability ratios below five than above, the North East was the most affordable local authority overall.
London, where eight in 10 local authorities have affordability ratios above 12, was the least affordable region overall.
‘North of England has surpassed the South’
Louisa Sedgwick, managing director of mortgages at Paragon Bank, said: “Our latest report reveals that, during the last decade, the North of England has surpassed the South in terms of the proportion of buy-to-let home purchases.
“I think one of the reasons why the region has increasingly gained the attention of landlords is the opportunity to generate strong returns on investment.
“Demand for rented homes is high in the North, as it is across the UK, and with property that can be significantly more affordable to buy compared to Southern regions, landlords are able to respond, confident that they will be able to achieve above-average yields.”
