Buy-to-let (BTL) property yields have remained relatively flat, with growth of just 0.1 per cent year-on-year, new research has found.
According to peer-to-peer investment platform Sourced Capital, despite the existence of a number of ‘profitable pockets’, BTL returns have fallen by 0.1 per cent year-on-year in England, and by 0.2 per cent in London.
However, the platform has identified a number of UK-wide locations where BTL yields are bucking the national trend. Corby has seen a year-on-year increase of 0.7 per cent, while Charnwood, Newcastle and Exeter have seen BTL yields rise by 0.5 per cent year-on-year.
Harlow in Essex, Ealing in London, and the Orkney Islands in Scotland have all seen a 0.4 per cent increase.
The most profitable city for BTL investors is Glasgow, which saw a 0.03 per cent annual decline in rental yields, but still maintains an average yield of 7.87 per cent – the highest in the UK’s BTL property sector.
Elsewhere in Scotland, Inverclyde, West Dunbartonshire, Midlothian and East Ayrshire have all continued to offer yields in excess of six per cent, while outside of Scotland, Burnley, Belfast and Blackpool also rank well.
“Turning a profit in the BTL sector remains a tough ask with a number of government changes denting profitability and yields remaining largely flat,” said Stephen Moss, managing director of Sourced Capital.
“With Covid-19 presenting additional hurdles such as rental arrears and longer void periods, many are now turning to alternative options such as the P2P sector for a safer, more hands-off investment.
“However, that’s not to say that a BTL property won’t make a great investment should you place your money in the right pockets of the market. BTL returns are based on fine margins and so an annual increase of 0.7 per cent isn’t as insignificant as it may seem.”