Average UK residential yields are likely to move upwards in 2020 according to the latest reports. Muted capital growth, an increased preference for renting, limited housing supply and a strengthening economy will stimulate yields, the reports conclude.
In its November Residential Market Survey, the Royal Institution of Chartered Surveyors (RICS) canvassed its members on their expectations from now to 2024. They believe housing rents will rise at a faster rate than prices, pushing up yields.
In Central London, yields are typically in line with the global average of between 3 and 4 per cent: buy-to-let purchasers can consider themselves fortunate to achieve anything over 4 per cent in the UK capital. Opportunities further from London present higher yields, with Liverpool (10 per cent) and Glasgow (8 per cent) currently among the highest, while commuter towns such as Reading, Peterborough and Brighton combine healthy yields with thriving economies.
Even London yields are expected to rise in the coming year, as rental values pick up. “The latest evidence from the market suggests a return to rental growth,” noted one major residential property report. “Leading world cities will continue to be magnets for an increasingly global, young, affluent workforce and this will support demand for prime rental properties.”