Recent industry research by LSL Property Services has revealed rent rises of 2% in the last 12 months with the average residential rent now at £753 per month. This reflects a 5.1% average gross yield on a typical residential rental property, down 0.3% since June 2013.
Despite the lower yields the report suggests that landlords have enjoyed the highest total returns in four years when you consider price growth and void periods between tenants. Up approximately 5.5% between July 2012 and 2013 the average landlord in England and Wales has seen a return of £17,307 split between a rental income of £8,168 and capital gain of £9,140.
David Newnes, Director of estate agents Reeds Rains and Yourmove added Most encouraging for landlords considering future investments will be the stability of rental yields over the last six months. The second half of 2013 saw yields dip back from record highs towards the long-run average of 5%. But so far this year we’ve witnessed an astounding consistency from gross yields. This indicates a healthy relationship between property values and rental income – though landlords must always pay attention to the all-important local factors that lie beneath this average.”
Source: LSLPS Buy-to-let index August 2014