According to the latest Paragon Buy-to-Let Index, rents have risen by 2.5% from £11,300 in November to £11,581 in December. Between December 2006 and December 2007 rents rose at their fastest level on record at 19.4%. Over the past quarter, rents rose 8.1%.
The regions with the highest rental incomes are London (£20,949), the South West (£14,691), and the South East (£11,630). Rental yields at 6.2% have reached their highest level since April 2006. The North achieved the highest yield in December (7.1%), followed by Yorkshire and the North West (both with yields of 7.0%).
Average investment property values have continued to rise, although at a slower rate than rental incomes. The average property value stood at £187,748 in December. Gross rental returns rose in December to 6.2%, the first time it has reached this level since April 2006. This marks the start of an expected upward trend in rental yields over 2008. Northern parts of the country performed strongest, with the North achieving yields of 7.1% and Yorkshire and the North West 7.0%.
Property values have experienced modest growth from £187,164 in November to £187,748 in December - a month-on-month increase of 0.3%. Over the past year, investment property values have appreciated 15.3%. The average property purchased 12 months ago has generated an overall return of 21.3%, taking account of both capital gain plus rental income. Terraced houses continue to generate the highest yields (6.7%), followed by semi detached and detached properties, both at 6.1%. Flats fall slightly behind at 5.5%.
