Rising house prices mean that yields on buy-to-let property remain relatively static. The cash value of rents received by private landlords has kept pace with inflation, while capital values of residential property continue to climb.



According to the latest quarterly survey of ARLA member letting agents, the average capital value of rented homes in the UK has risen by 10.7% during the three months to the end of February. This is as a result of rises of 12.4% in prime central London. By contrast, average capital values in the rest of the country fell very slightly, by 0.6%.



The average value of rented flats rose by 6%. Rental demand continues to outstrip supply as tenants are now staying in rental properties for more than 15 months on average.



The letting offices in the ARLA survey report that just over half of their rental portfolios are now made up of investment or buy-to-let properties. Among these investment properties, new build and properties in good condition are the most popular with buy-to-let landlords. Apart from London, properties that are less than ten years old are proving to be the most popular with private landlords.



To finance their property investments, landlords are now borrowing around 70% of the purchase price; 73% away from London and 68% in London.



Six out of ten agents in London report more demand than rental stock available. In the South East, the proportion reporting more demand than supply has risen from 37% to 42%. There are also small rises in tenant demand being reported from the rest of the country.