Landlords make 13% return on buy-to-let
The average buy-to-let property investor made a total return of 13 per cent in the 12 months to June 2007.
That is according to new figures from Birmingham Midshires, showing when rents and rising house prices combine buy-to-let investors are doing better than at the same time last year.
"Buy-to-let house price growth has edged higher over the past year, while rents continue to rise across the country, boosting returns," said Tim Crawford, group economist at Birmingham Midshires.
Birmingham Midshires research shows the average price of a buy-to-let property increased 7.3 per cent over the year to June 2007 to a value of £141,776.
Average rental yields were 5.5 per cent, slightly down on last year, with the average rent increasing 4.5 per cent over the year to stand at £651 a month in June 2007.
The bank expects the market to slow over the coming year as increasing mortgage costs - which are not included in the Birmingham Midshires figures - take their toll on house price rises.
But this is not a reason to lose confidence in buy-to-let investments.
"While house price growth in the sector is expected to be more subdued near term, reflecting the impact of higher interest rates, the potential for further increases in rents should encourage long term investors," said Mr Crawford.
"There also remains the potential for healthy long term capital appreciation in the buy-to-let sector, particularly given the backdrop of more households being formed each year than there are new properties being built."
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