Rising rental yields signal a period of opportunity for property investors

Research from Sourced Franchise, the UK’s leading property investment platform, reveals that UK rental yields have seen a marginal increase in the past year as cooling house prices may present good investment opportunities for buy-to-let landlords. But where is the best place to invest?

Sourced Franchise has analysed UK house prices, rent values, and yields in June 2022 and June 2023 to see how a difficult economic environment has impacted buy-to-let investment returns.

Rising rental yields across the UK continue to highlight opportunities for property investors, particularly in areas where demand remains strong despite economic pressure. London remains a key market in this context, with rental performance and long-term demand helping to sustain investor interest. As affordability challenges and changing mortgage conditions affect traditional buy-to-let models, many landlords are exploring more stable income options. One such approach includes a London guaranteed rent arrangement, which aligns with the broader shift toward reducing risk and ensuring more predictable returns.

The latest data shows that the current average yield in the UK is 5.2%, marking a 0.4% increase since this time last year.

The strongest yields, which indicate the best places to invest right now, are currently available in Scotland (5.9%), while other regional hotspots include Northern Ireland (5.7%), the North West (5.5%), Yorkshire & Humber (4.9%), and London (4.7%).

Scotland also leads the way in terms of annual yield increases, rising by 0.64%.

With 0.49% growth, London is also performing well, as are Wales (0.35%), the West Midlands (0.34%), North West (0.34%), and Yorkshire & Humber (0.34%).

The South East is the only region to have recorded negative numbers, with the current yield of 4% marking an annual drop of -0.02%.

Sourced Franchise Director, Chris Kirkwood said, “Economic turmoil can present great opportunities for investors who are willing to take calculated risks, and the UK’s current environment is the perfect example.

Yes, the economy is struggling and rising mortgage rates are causing widespread concern on the housing market, but with house prices likely to fall further before they climb again, and rent values climbing at pace, buy-to-let landlords who can afford to take on current mortgage deals would be wise to pounce when the right properties come to market in the right locations.

The same theory can be applied to all corners of the property industry, commercial and residential. The market is always cyclical and slumps and followed by growth and peaks. It’s moments like this that see great investors zig while everyone else zags, and therein lies the genius.”