Buoyant house prices boost buy-to-let returns

The company’s Buy to Let Index revealed average residential rent across England and Wales rose 0.6 per cent between April and May.

This helped push house prices up to 12.2 per cent higher in May 2014 than in May 2010. A 1.1 per cent yearly rise in absolute terms means the average rent in England and Wales has risen by £8 in the past 12 months to £745 a month.

David Brown, commercial director of LSL Property Services, said: “Private renting is becoming cheaper in real terms. May’s latest sub-inflation rent rises will help more than 9m tenants. To put that in context, this is more than 100 times as many households as have benefited from Help to Buy in its initial stages so far.”

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Tony Bennett, managing director of Somerset-based Platinum Property Partners, said: “Buy-to-let investors will be pleased to see some growth and, in fact, many are enjoying a cocktail of rising house prices, more stable rents and fewer late payments. This is growing the income these investors are making from their buy-to-let properties and further increasing the allure of buy-to-let to investors as an alternative income stream.”

Key findings

· Average residential rent across England and Wales increases 0.6% between April and May.

· Despite the monthly change, the 1.1% annual rise is below inflation for the 12th successive month.

· London rents now rising at only 1% a year after heavy investment by landlords in the capital.

· Landlords are seeing a four-year high for total returns, up to 12.2%, driven by house price rises.