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%.
Strongest rental growth in London, but large variations regionally
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%).
Monthly rents in London 75% above national average
Not surprisingly tenants in London pay the highest average rent, which at £1,287 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.
Phil Rickards, BM Solutions, comments:
"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."
"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."
