Mar 26, 2012
A 4.8% growth in the average monthly rent led buy to let (BTL) investors across the UK to achieve a rental yield1 of 6.1% in 2011, according to new figures from BM Solutions – part of the Lloyds Banking Group.
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.
Average Rental Yield, Value and Rental growth by Region
|Annual Rental Yield 2010||Annual Rental Yield 2011||Average Monthly Rent (£) – 2010||Average Monthly Rent (£) – 2011||Increase in average monthly rents
|Yorkshire & the Humber||6.0%||6.3%||467||488||4.4%|
Source: Birmingham Midshires
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 £1,212 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).
Phil Rickards, BM Solutions, comments: “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 six per cent 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.”
- Rents for buy-to-let properties rise by 4.8% (independent.co.uk)