Buy to let bounces back: average returns hit 18-month high of 12.2%

Good news for agents having to work harder to persuade would-be landlords that buy to let makes financial sense after the stamp duty surcharge - new figures show new high annual returns for landlords.

Data from Your Move and Reeds Rains shows that taking into account both rental income and capital growth, but before outgoings, the average existing landlord in England and Wales has seen total returns rise to 12.2 per cent over the 12 months to March - the fastest annual rate of return for existing landlords seen since November 2014.

In absolute terms this means that the average landlord in England and Wales has seen a return of £22,135 over the last 12 months, before outgoings. Of this, the average capital gain contributed £13,494 while rental income made up £8,641.

The gross yield on a typical rental property in England and Wales (before taking voids into account) hit 4.9 per cent in March, slightly down on a year earlier. 

Meanwhile average rents across England & Wales now stand at £791 per month as of March 2016, some 3.0 per cent higher than the same point last year - that’s the equivalent of an extra £23 per month for the average tenant, say the agencies.

This comes despite a relatively subdued March on a monthly basis, with the level of average rents the same as was seen in February.

Leading the whole of England and Wales, rents in the East Midlands now stand 8.5 per cent higher than in March last year, at an all-time record high of £613 per month. This is followed closely by the West Midlands with 6.7 per cent with London next, up 4.6 per cent. 

“Regionality is the core challenge for the private rented sector. In the towns and cities with the biggest renting populations it is a constant struggle for supply from landlords to match demand from tenants. With a surge in jobs and local economic activity, rents rise. Keeping pace will not be easy, and will depend on the freedom to invest as a landlord” says Adrian Gill, outgoing director of the agencies.