Paragon Mortgages - Buy to Let Rents Reach Record High
Rents on buy-to-let properties rose by an average 3.3% during August to reach a record £9,354 a year.
At the same time the value of the average buy-to-let property rose by 3.27% to £123,498 - more than 20% higher than a year ago, according to the latest figures from Paragon Mortgages.
Annual rental yields rose by 0.03% to 7.57% of a property's value, following two months of modest falls, as a result of the jump in average rents.
Rents have been rising steadily since April, and are now around 2.7% higher than they were this time last year.
John Heron, managing director of Paragon Mortgages, said: "This month's strong increase in rents achieved provides evidence of sustained demand from tenants, at what is traditionally a busy time of the year for landlords as students and young renters sort out accommodation.
"While prices paid by landlords for properties are still rising strongly, the increase in rents has more than matched that rise, to reach the highest level we've ever seen. This has led to stable yields."
Rental yields in the South remain significantly lower than in the North as a result of lower property prices in the North.
But the group said there had been some convergence, with yields in some northern regions falling slightly, and those in southern region increasing.
Overall, the best rental yields are still to be found in the North at 9.94%, although this is below the previous month's 10.36%, followed by the North West at 9.42%.
The lowest yields are in Greater London at 6.71%, although this is up from 6.56% the previous month, and the South East at 6.96%.
In the East Midlands landlords have seen total returns of 46.42% during the past 12 months, although this is down from 56.66% in August, while returns in the West Midlands have averaged 36.47%, down from 43.85%.