A report produced this week by ARLA (Association of Residential Letting Agents) showed the national average rental yield is 4.9% (the same report also says the average length of a tenancy is currently 19 months).
I suspect many landlords in Central Somerset fail to match this number unless they have a HMO (House of Multiple Occupation) where yields can be as high as 15%-18%.
The rental yield is calculated by multiplying the monthly rent received by 12 and dividing the result by the price paid for the property.
The report did get me thinking about the yields typically achieved in Central Somerset and which specific areas or property types are most likely to beat the national average.
If you were to buy the mythical average house in Glastonbury and get the mythical average rent you could expect a yield of 3.3%. Street does slightly better at 3.8% whilst Shepton comes in at 3.54%. In Glastonbury, the best average yield is in the Glastonbury St. Johns ward were the average is 3.9%. The Moor ward (Ashcott, Moorlinch, Shapwick areas) has the highest average yield in Central Somerset with 4.8%. Not very exciting numbers I am sure you will agree though in reality no serious investor would be content with paying the average price for a property and achieving the average rent.
Flats give best yields
When we look at property types, the statistics start to look more interesting. In Glastonbury flats have an average yield of 5.65% and generally produce better yields than other property types. The one exception is terraced houses in the Glastonbury St Edmunds ward which return on average 5.89% from an average asking rent of £825 per calendar month.
Across the Brue in Street the pattern is similar with flats proving best for rental yields with an average yield of 5.44% with the best average in Street West (5.9%).
The highest average yields in Central Somerset can be found from flats in Coleford and Holcombe (7.84%), Creech (7.41%) and Wells St Cuthbert’s (6.4%).
Buying flats always comes with a wealth warning as service charges, ground rents and sinking fund contributions can eat into any profits.
Exceptions to the above include the Postlebury ward where the average yield on a semi is 6.4% whilst detached properties in the Moor ward return an average yield of 6.1%.
Lots of stats to digest but what this does illustrate is if you are thinking of investing, consider carefully the area and property type and don’t accept average!
About Tom Morgan
Founder of Jungle Property the multi award-winning letting agent based in Glastonbury, Somerset. I am passionate about property and Glastonbury and about providing the very best advice to anyone who wants the best return on a buy-to-let property investment. For an open and brutally honest opinion on anything in the Glastonbury property market please contact me via tom.morgan@jungleproperty.co.uk
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