The research from BM Solutions shows that buy to let investors have seen average gross rental yields edge up to 6.2% in June 2012, compared to 6% 12 months earlier. The increase has been primarily driven by a 5.3% growth in average rental income across Britain over the last year.
Regionally, rental yields vary with the highest returns in the North at 7% and the lowest in London at 4.8%. The North is followed by the North West, Yorkshire and the Humber, both 6.5%, and Wales at 6.2%. The lowest yields are all in southern England, with East Anglia, South East and the South West all recording returns of just over 5%.
Nationally, the average monthly rent increased from £697 per month in June 2011 to £734 pm in June 2012, a rise of 5.3%.
However, there has been significant variation in rental growth between regions over the last year. The biggest increase came in London with average monthly rents rising by 10.5% or £122 per month in the year to June 2012, followed by the South East at 6.2% and Wales at 5.8%.
In contrast, rents in the South West have barely changed since June 2011 registering growth of just 0.2% while in the North average monthly rents fell marginally by 0.4%.
Tenants in London pay the highest average rent, which at £1,287 per month is 75% above the national average of £734. The South East has the second highest average rent at £885 per month followed by the South West at £706.
The lowest average rents are in the North at £477 per month, Yorkshire and the Humber at £484 and Wales at £490, all around a third of the average rent paid in London.
‘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%. 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,’ said Phil Rickards of BM Solutions.
‘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,’ he added.
