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North beats South in rental yield table

Location is one of the key issues facing prospective landlords when they decide to purchase a new home to rent out. Of course, the quality of the building, its price and the number of rooms will be major considerations, but its location will eventually determine whether anybody wants to rent it and how much they are prepared to pay.

With this in mind, landlords might be interested to learn that it is the north of England rather than the south that provides the highest yields. Paragon has issued its latest findings in a yield table and some of the results could come as a surprise to many industry observers.

It discovered the north-west is the region in which landlords will enjoy the greatest yields, with the typical rate found to be 6.6 per cent in this area in the first quarter of 2012. That is up from 5.9 per cent in the final quarter of last year. And it is a similar story among many northern regions, with the north-east recording a rate of 6.5 per cent.

John Heron, director of the mortgage company, said: "We have seen another interesting shift in the regions taking the top spots, with a more distinct north-south divide in Q1 with the north outperforming their southern counterparts. Tenant demand continues to grow and fluctuate in certain areas of the country, at different times. So I suspect we will continue to see movement in the yield table in the months to come."

While choosing the right location is a good step towards enjoying healthy rental returns as a landlord, it might also be worth investing in home improvements. For instance, calling in professional builders, electricians or other tradesmen to add rooms or do up existing features can put property owners in a position to demand more cash for their abodes.

The north's undoubted success does not necessarily mean there is nothing to be gained from investing in properties to rent in the south. Indeed, the statistics show that some areas also enjoy a high average yield - the south-west, for example, recorded a rate of 6.4 per cent in the three-month period in question.

Eastern England was registered at 6.3 per cent, the south-east hit 6.1 per cent and London recorded 5.9 per cent yields. Such figures show there is money to be made from being a landlord in the north and the south of the country.

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