June edition of Paragon Mortgages Buy-to-let Index show that the typical landlord earns a gross rental income on each property of £10,189, or just over £849 per month, a rise of 0.8 per cent. This compares with Aprils figure of £10,113 and Marchs of £10,082.
At the same time, investment property prices continue to edge up, rising by 2.9 per cent over the month, from £164,247 in April to £168,935 in May.
The price at which landlords purchase properties has risen by 7.7 per cent over the past twelve months, reflecting the relative buoyancy of the residential property market in late 2005 and early 2006.
John Heron, Paragon Mortgages Managing Director, said: With rents stable, tenant demand healthy and market confidence solid, landlords continue to purchase new properties in a generally upward moving property market.
Investor activity has been increasingly strong over the past nine months.
Average rental yields stand at 6.0 per cent, although there continues to be variations between regions.
Regionally, yields tend to be higher in parts of the country where the property prices are lower, while Greater London and the South East, where prices average £327,139 and £184,087 respectively, consistently have lower yields.
Heron said: Investors are dispassionate purchasers and buy in response to growing tenant demand, rather than in the expectation of short-term capital appreciation.
They purchase properties in locations where they believe that tenant demand will remain sound over the medium to long term, paying particular regard to local amenities, transport links and the individual preferences and expectations of the people who are likely to rent the property.
For the second consecutive month, the East Midlands and the North West head the tables as the highest yielding regions, at 6.6 per cent.
While Greater London has the lowest rental yield, the total return for the capital is strong. London has again this month generated the highest total return, of 36.3 per cent, on a typical property purchased 12 months ago.
Heron said: Landlords are experiencing solid demand for rental properties as economic conditions remain sound and interest rates are stable. There is a long term structural shortage of good quality residential property in the UK, and demand for it is growing steadily.
