Buy-to-let landlords see returns exceed 13%

Buy-to-let landlords have seen a significant increase in total returns, according to Paragon Mortgages Buy-to-Let Index.

Total returns across the UK have risen significantly this month, up 2.8% from 10.5% in September to 13.3% - the highest in four months.

For the second consecutive month, the North heads the table in terms of overall returns over a 12 month period at 26.1%. It is followed by the South East (24.2%) and Greater London (16.9%).

Rental yields remained consistent in October at 6.0%. Regions with the highest yields were Wales (6.6%), the South West (6.5%), and the North West (6.4%).

Average rental incomes have risen from £10,025 in September to £10,039 this month, up 0.1%.

Average property values rose by £1,143 from £166,417 in September to £167,560 in October, a rise of 0.7% over the month. They are 6.8% higher than a year ago.

Regionally, the top performers by rising property values are the North (19.6%), the South East (18.0%) and Greater London (11.0%).

Property values rise in October

The average price at which landlords buy investment properties rose in October to £167,560, up 0.7% from September. Property values have steadily risen over the last year; this month’s figure is up 6.8% from October 2005 when the average value of a buy-to-let property stood at £156,879.

Yields

Average yields remained stable at the 6.0% mark. Wales experienced the highest average yields for the second consecutive month (6.6%), whilst the South West (6.5%) and the North West (6.4%) have also sustained higher than average yields in October, keeping the top three regions the same for the second month running.

Rental incomes rise

Rental incomes rose by £14 or 0.1% from £10,025 in September to £10,039 in October, remaining above £10,000 for the eleventh consecutive month.

Regionally, the areas that have enjoyed the highest increase in rental incomes over the last 12 months are the South East and the North, both at 10.7%.

Highest yields from terraced and semi-detached properties

In October, yields on terraced, semi-detached and detached properties all stood at 6.3%. Flats continued to be the lowest yielding properties this month at 5.5%.

Total annual return is the highest in four months

Total return on a property purchased 12 months ago (including capital gain plus rental income) rose to 13.3%, up 2.8% from September.

The North continued to experience the highest returns this month at 26.1%. Other regions with above average returns in October were the South East (24.2%) and Greater London (16.9%).