According to a buy-to-let lender’s figures, the North of England has again enjoyed the biggest jump in rental returns during Q2 of this year for BTL landlords because tenant demand was higher than available rental housing stock.

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The figures were taken from the lender’s buy-to-let index that shows across England the average rental yields on residential buy-to-let properties is 5.3%, which is a slight decline of 0.4% from Q2 2019.

There were only three regions that were found to have positive rental yields in the same quarter against the previous year’s which are, the North West, West Midlands and the South East.

On a region by region basis, the North West of England had the highest rental yield of 7.6% which is higher by 0.6% year on year.

However the East Midlands posted the worst year - on-year performance of -2.1%, falling to a 4.4% yield from the previous year’s 6.5%.

Wales was not included in the Q2 figures as it has had different lockdown restrictions to the mainland, so meaningful data is not readily available to provide a proper rental yield figure comparison.

A spokesperson for the specialist lender, said: “While we are very early into the post-lockdown ‘new normal’ the latest iteration of our quarterly research appears to show a more promising picture for rental yield, than some might have predicted, with what we might describe as only a slight softening compared to the previous year.

“The economic backdrop may appear somewhat bleak at present, but this might change quickly depending on the type of recovery we get, and certainly at the moment our latest figures do not suggest sharp falls in rental yield. This may well be as a result of pent-up demand and more households being formed as a result of the lockdown, but it’s clear that more data will be required and it will be interesting to see whether this trend will be maintained into the rest of the year.

“Clearly, we will need to take into account the tailing-off of the furlough scheme and how this impacts on the level of unemployment in the country, the ability of existing tenants to keep paying their rent, and the re-introduction of evictions and repossessions at the end of the year, to get a clearer picture of where rents and yields are heading.

“What we do know, as a result of our experience through the Credit Crunch and the recession that followed, is rents are not as susceptible to these economic hits as property prices. Occupants are much more likely to opt for shorter-term financial commitments offered by renting in such circumstances, rather than move to longer-term property ownership.

“That being the case, and while the rental market outlook has undoubtedly weakened, we are hopeful that tenant demand will be maintained and even strengthen, and that with a relative shortage of properties to choose from, this will ensure rental levels and yield improve.

“We are certainly seeing growing levels of interest from professional landlords adding to portfolios and that borrower demographic appears even more committed to property investment, which is good news for advisers active in this space.”