Buy-to-let investors saw rental yields increase to 6.2 per cent in June 2012, according to research by BM Solutions.
It is a small year-on-year increase, with the June 2011 figure 6 per cent.
According to BM Solutions, the increase was primarily driven by a 5.3 per cent growth in average rental income across Britain in the last year, from £697 per month in June 2011 to £734 this June.
BM Solutions’ Phil Rickards said: “Nationally, average yields on buy to let properties have edged higher over the past year. A key factor pushing up yields has been rental growth in excess of 5 per cent.
“There have been significant regional variations with the biggest rise in average rents taking place in London, where demand for rental accommodation has been particularly strong.”
The average rent in London rose 10.5per cent, £122 per month, to £1,287 in the year to June 2012, with the next highest increase in the South East, where it went up by 6.2 per cent. London’s rent is now 75 per cent above the national average of £734, well clear of the South East, which is second with an average of £855.
In contrast, rents in the South West have barely changed since June 2011 registering growth of just 0.2 per cent, while the average monthly rent in the north fell 0.4 per cent; the area also has the lowest average rent, which is £477.
While London saw a large increase in rent, it still brings in the lowest yield, at 4.8 per cent. The highest returns recorded in June were in the north, where the figure was 7 per cent and the north west and Yorkshire and the Humber (both 6.5 per cent).
Rickards added: “Whilst rental yields have remained steady over the past year, it should be noted that these figures do not take into account the time when properties are vacant – which can impact the average yields.
“Despite the encouraging figures, it’s still really important for any potential investors in the market to do their homework and seek expert advice first.”
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