Strong returns available across England, but landlords cautioned on income safeguards
Rental yields are approaching 7% in England's best-performing markets, according to new analysis by The Letting Partnership, which has cautioned that securing a strong return is only part of what landlords need to consider.
The firm examined average house price and private rental data across England to estimate nominal rental yields at local authority level. The national average currently stands at 5.9%, based on an average property price of £293,262 and average monthly rent of £1,446.
Newcastle upon Tyne recorded the highest estimated nominal yield at 6.9%, with an average property price of £208,589 and monthly rent of £1,206. Portsmouth and Manchester both came in at 6.5%, followed by Southampton and the London borough of Tower Hamlets at 6.4%. Bristol, Blackpool and Nottingham each returned estimated yields of 6.3%, with Lincoln and Kingston upon Hull at 6.2%.
The data suggests landlords can still achieve competitive returns across a wide range of markets, particularly where affordable house prices align with strong rental demand.
Income protection beyond the headline figure
The Letting Partnership noted, however, that headline yield does not capture the full picture. Where landlords engage a managing agent, rental income typically passes through the agent's client account before being reconciled and forwarded. The robustness of an agent's financial controls is therefore a material factor in protecting a landlord's income.
The scale of funds involved varies considerably. In Westminster, the average monthly rent stands at £3,168 despite an estimated nominal yield of 4.5%, while Kensington and Chelsea recorded the highest average monthly rent in the analysis at £3,596, equating to a yield of 3.5%. These figures represent annual gross rental income of more than £38,000 and £43,000 respectively — substantial sums that may pass through agent client accounting systems.
"Yield is understandably front of mind for landlords and, as the figures show, there are still parts of the country where investors can achieve very healthy returns," said Chris Mason (pictured right), chief operating officer at The Letting Partnership. "However, generating that return is only half the equation. For landlords using a managing agent, thousands or even tens of thousands of pounds in rental income can pass through that business every year, and landlords need confidence that the same attention being paid to maximising their return is also being paid to protecting it.
"Good client accounting isn't necessarily something a landlord sees on a day-to-day basis, but it is fundamental to a well-run letting agency. Accurate reconciliations, robust financial controls and clear processes around the receipt and remittance of client money all sit behind the rent arriving where it should, when it should.
"Landlords should absolutely be asking what an agent can achieve for their investment, but they should also be asking what systems and safeguards are in place once that money starts coming in. For good agents, being able to demonstrate those standards clearly is also an opportunity to differentiate themselves and give landlords greater confidence in who they are trusting with their rental income."
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