England and Wales rent rises "slowest for years"

Rent rises across England and Wales have slowed to their lowest annual rate in over four years according to LSL Property Services - returns are now just 0.9 per cent higher than a year ago.

Rents have not increased as slowly as this since early 2010. In absolute terms this means the average rent in England and Wales is only £6 higher than a year ago, currently standing at £741 per month compared to £735 in March 2013.

On a monthly basis, rents fell by 0.2 per cent between February and March. This leaves rents in England and Wales approximately £1 lower than in February.

Gross yields on a typical rental property have seen no significant change on a monthly basis, standing at 5.1 per cent in March, the same as was recorded in February.

However, yields have fallen on an annual basis compared to March 2013, when the average gross yield on a rental property in England and Wales was 5.4 per cent. This fall in yields on an annual basis is due to increases in property values.

Taking into account this price growth, plus improved void periods between tenants, total annual returns on the average rental property have risen to 12.0% in the year to February. This compares to just 5.1 per cent in March 2013 - and represents the largest recorded total annual returns for landlords since June 2010 when this figure stood at 12.5 per cent.

In absolute terms this means the average landlord in England and Wales has seen a return of £19,647 in the last twelve months, with rental income of £8,038 and capital gain of £11,609.

If rental property prices continue to rise at the same pace as over the last three months, the average buy-to-let investor in England and Wales could expect to make a total annual return of 17.5 per cent over the next 12 months, equivalent to £30,600 per property.