A 4.8 per cent growth in the average monthly rent led buy to let investors across the UK to achieve a rental yield of 6.1 per cent in 2011, according to new figures from BM Solutions. Strong demand for rental properties increased further last year, with the average monthly rent climbing to £716 in 2011 from £682 in 2010 as a result.
While 2011 rental yields were marginally lower than the previous year (6.2 per cent), they remained buoyed by continued rental increases across the UK. Regionally, the highest rental yields in 2011 were in the North (7.0 per cent), North West, Yorkshire and the Humber (both 6.3 per cent), Wales (6.0 per cent), West Midlands and the East Midlands (both 5.9 per cent). Greater London (4.8 per cent), South West (5.0 per cent), South East (5.2 per cent) and East Anglia (5.3 per cent) all registered yields below the UK average.
Phil Rickards, BM Solutions, commented:
“There is a very healthy demand for rental properties across the UK right now, which in part may be driven by the costs associated with buying a home: costs which, for some, will only increase as the stamp duty holiday comes to an end. Average gross yields on a buy to let property have been just over six per cent for the past two years, driven by growth in rental values.
“However, with house prices likely to remain broadly flat again this year, buy to let landlords can again expect little capital gain on their investment in 2012.”
Regional rental prices show significant variation …
While the national average monthly rent increased by 4.8 per cent overall, there are more significant gains in regional areas. The largest increases were in East Anglia (8.0 per cent) and the North (6.9 per cent). The South East and Greater London recorded rises of 5.8 per cent and 5.6 per cent respectively. In contrast, rents increased by less than 1 per cent in Wales (0.1 per cent) and Scotland (0.7 per cent).
Average rents in London more than twice the national average
The average rent in Greater London remains significantly higher than elsewhere in the UK, at £1,212 per month. The average monthly rent in the capital is 69 per cent higher than UK average of £716 and 41 per cent above that in the South East (£858) – the next highest region. The lowest average rents are in Wales (£474 per month), the North and Yorkshire and the Humber (both £488 per month).
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