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Buy-to-let sector rents and yields still buoyant

Monday 26th March 2012

A 4.8% growth in the average monthly rent led buy-to-let investors across the UK to achieve a rental yield of 6.1% in 2011, according to figures from BM Solutions.

Strong demand for rental properties increased further last year, with the average monthly rent climbing to £716 in 2011 from £682 in 2010 as a result.

While 2011 rental yields were marginally lower than the previous year (6.2%), they remained buoyed by continued rental increases across the UK.  
Regionally, the highest rental yields in 2011 were in the North (7.0%), North West, Yorkshire and the Humber (both 6.3%), Wales (6.0%), West Midlands and the East Midlands (both 5.9%). Greater London (4.8%), South West (5.0%), South East (5.2%) and East Anglia (5.3%) all registered yields below the UK average.

Phil Rickards, BM Solutions, said: "There is a very healthy demand for rental properties across the UK right now, which in part may be driven by the costs associated with buying a home: costs which, for some, will only increase as the stamp duty holiday comes to an end. Average gross yields on a buy-to-let property have been just over 6% for the past two years, driven by growth in rental values.

"However, with house prices likely to remain broadly flat again this year, buy-to-let landlords can again expect little capital gain on their investment in 2012."

While the national average monthly rent increased by 4.8% overall, there are more significant gains in regional areas. The largest increases were in East Anglia (8.0%) and the North (6.9%). The South East and Greater London recorded rises of 5.8% and 5.6% respectively. In contrast, rents increased by less than 1% in Wales (0.1%) and Scotland (0.7%).

The average rent in Greater London remains significantly higher than elsewhere in the UK, at £1212 per month. The average monthly rent in the capital is 69% higher than UK average of £716 and 41% above that in the South East (£858) - the next highest region. The lowest average rents are in Wales (£474 per month), the North and Yorkshire and the Humber (both £488 per month).

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Mike Jones

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