More good news for landlords this week—according to figures published by a leading lender, rising rents are leading to increased buy to let yields across the whole of the UK. So although house prices are still in a never-ending freefall thanks to the grim state of the Eurozone and a double dip recession, the average gross rental yield for UK landlords has risen from 6% to 6.2% in the last twelve months.
Of course the main reason why landlords are enjoying an increase in their average rent yield is because rents keep rising in line with the surging demand for rental property across most of the UK. In June last year, the average monthly rent was £697 whereas figures for June 2012 show the average monthly rent is now £734, although tenants in London are paying on average £1,287 per month.
Are there variations in rental yields across the UK?
Rent yields are closely linked to property prices: the average monthly rent in London may well be very high, but because property prices are correspondingly high, too, rental yields are the lowest at only 4.8%. Landlords in the north of England, on the other hand, are considerable better off: here rent yields are at their highest (on average around 7%) thanks to much lower property prices.
If you are looking to invest in buy to let, Yorkshire and the Humber can offer good returns on your investment whereas London, the South East, South West and East Anglia offer a smaller return. However, rental yields are only one part of the bigger picture—landlords should always take into account the length of time a property is likely to remain vacant over a twelve month period as this will significantly impact on profit margins.
