Landlords in the capital received more than double the average national annual returns in rent in the past year.
The latest Buy to Let Index from LSL Property Services shows that landlords in London earned over £38,000 (14. 6 per cent) in returns in the last 12 months while those in Wales and other parts of England made almost £15,000 (8.9 per cent) in returns.
The return for London landlords was more than five times that of those in the North East and Yorkshire & the Humber.
Across England and Wales, total annual returns on an average rental property have grown dramatically in the past twelve months, to 8.9% in January, up from 5.7 per cent in January 2013. In absolute terms this represents an average return of £14,767, with rental income of £7,961 and capital gain of £6,806.
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 13 per cent over the next 12 months, equivalent to £22,256 per property.
Gross yields on a typical rental property stand at 5.2 per cent as of January, down slightly from 5.3 per cent in January 2013. However, total returns have been boosted by capital accumulation and lower void periods between tenants.
David Brown, commercial director of LSL Property Services, comments: “Rental yields remain historically high, and such rental income is still underpinned by a demand-driven lettings market. Meanwhile, rising prices are delivering an equity bonus for landlords – considerably boosting total annual returns. Such equity growth is also an important factor for some landlords looking to remortgage existing properties to fund new purchases. As mortgage availability grows and rates seem set fair for the time being, many landlords will continue to expand their portfolios.”
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