31 Jul

Strong returns for landlords

Strong returns for landlords

Many landlords are enjoying the strongest returns on their property investments in four years, claims new data.

Information from LSL Property Services reveals that total annual returns on the average rental property stood at 11.8 per cent in the year ending in June.

According to the Buy-to-Let Index, this is 5.5 per cent higher than in the previous year and is at its peak value since 2010.

It would appear that property values are the main drivers behind this growth, with rents only increasing slightly over the past 12 months.

Since June 2013, there has been a 1.4 per cent increase in the amount paid by tenants - equal to an average of £747 across the UK.

This has meant landlords have seen a small fall in rental yields during the past year. Yields now stand at 5.1 per cent - 0.3 per cent lower than in June 2013.

However, it is not all bad news for landlords because once the increase in value of rental properties has been factored in, then investments are much more favourable.

The research from LSL Property Services concluded that if rental property prices continue to rise then the average buy-to-let investor in England and Wales could expect to enjoy a total annual return of 13.4 per cent over the next 12 months - equal to £23,718 per property.

"Rental yields are solid and remain very tempting by historical standards, while capital accumulation provides a very big cherry on the cake," said David Brown, commercial director of LSL Property Services.

"Landlords have noticed these incentives, and this has helped to bring a good number of new properties into the lettings market.

"Potential returns will remain just as strong as tenant demand seems set to only rise further."ADNFCR-1222-ID-801738898-ADNFCR

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