Buy-to-let landlords enjoy improved rental yields

Investors have seen average gross rental yields edge up to 6.2% in June 2012, compared to 6.0% 12 months earlier, according to research from BM Solutions.

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 (7.0%) and the lowest in London (4.8%). The North is followed by the North West, Yorkshire and the Humber (both 6.5%) and Wales (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 (pm) 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 pm) in the year to June 2012; the capital is followed by the South East (6.2%) and Wales (5.8%). In contrast, rents in the South West have barely changed since June 2011 registering growth of just 0.2%. In the North average monthly rents fell marginally (-0.4%).

Not surprisingly tenants in London pay the highest average rent, which at £1287 pm is 75% above the national average of £734. The South East has the second highest average rent (£885 pm), followed by the South West (£706). The lowest average rents are in the North (£477 pm), Yorkshire and the Humber (£484) and Wales (£490) – all around a third of the average rent paid in London.

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