Delivering average yields of 7.2%, the North West was far ahead of the rest of the pack, with Yorkshire and Humber following in second place posting yields of 6.5% and London lagging way behind producing yields of just 4.4% for investors.
The region’s market is also attractive for buy-to-let investments as it continues to grow at a dramatic pace with rents jumping by 1.6% since June; the fastest month-on-month increase seen by any region in the UK, other than the South East.
Arguably more encouraging though is the year-on-year growth in the region, which stands at 3.0% when compared to July last year. This stable growth reflects the longevity in the market, and ensures landlords of steady rises erasing any fears of boom or bust.
In addition to ranking the performance of each region, the report also discussed the conditions of the UK buy-to-let market as a whole, highlighting that the average landlord in England and Wales in the 12 months to July 2014 received an annual rental return of £17,307 - £8,168 of which is from rental income and £9,140 of which is from capital gains.
These high annual returns mean that landlords in July enjoyed total annual returns of 10.3% from the average property, up from 6.1% a year ago. This significant jump came as a result of rising rents, which rose for the first time in real terms for over a year (14 months) in July. This means that the average residential rent across England and Wales is now £753 a month, representing a year-on-year growth of 2% since July 2013, when the average rent was £738.
Surprisingly, these soaring rents have not resulted in a rise in rental arrears, which have actually dropped over the last month. In June, rental arrears made up 7.8% of all rent, while in July, arrears accounted for just 7.3% of all rent. In real terms, this means that since July last year the total amount of rental arrears has dropped by over £20 million, from £273 million to £252 million.
Spokesman for LSL, David Newnes commented: “Steadier price growth is good news for landlords aiming to minimise volatility in the value of their properties, while hoping for gradual and sustainable rises. Such capital accumulation will vary alongside the purchase market.
“Most encouraging for landlords considering future investments will be the stability of rental yields over the last six months. The second half of 2013 saw yields dip back from record highs towards the long-run average of 5%.”
To read the full report click here