Yields are Down but Rents Are UP

The average residential rent across England and Wales now stands at £753 per month, according to LSL Property Services.

This is the same as in November and is up from an average of £738 per month a year ago.

But rents are just 0.1% higher than a year ago after consumer price inflation of 1.9% – the first real-terms increase in rent since last September according to the LSL research

LSL also says that rent in nine out of 10 regions are higher than a year ago. The fastest annual increase is in the south east, where the average monthly rent is now 3.8% more than a year ago. In the north west the rise is 3% and in London 2.3%.

As of July the gross yield on a typical rental property in England and Wales stands at 5.1%, slightly down on a year ago.

Taking into account price growth alongside void periods between tenants, total annual returns on an average rental property stand at 10.3% in the 12 months to July.

In absolute terms this means the average landlord in England and Wales has seen a return, before any mortgage payments or other deductions, of £17,307 in the last year. This is made up of rental income of £8,168 and an average capital gain of £9,140.

Looking ahead, if rental property prices continue to rise at the same pace as over the last three months, the average buy-to-let investor in England and Wales could expect to make a total annual return of 8.5% over the next year, equivalent to £15,050 per property, claims LSL.