According to LSL Property Services, buy-to-let re-emerged as an attractive investment in 2009 as total annual returns reached 4.1%, giving a rental yield of 4.6% taking into account void periods and a small capital loss due to a fall in house prices.

In 2008 a typical landlord lost £23,000 in capital value, but earned £7,900 in rent for the 12 months however, this resulted in a total loss of £15,100 compared to 2009 where the landlord would have lost just £600 on the capital value of the property, earned £8,000 in rent, resulting in a total profit of £7,400.

David Brown, commercial director of LSL Property Services, said: “After a difficult year, the end of 2009 has seen buy-to-let return as a profitable investment. Returns have not only turned positive- they’ve hit an 18-month high. Property bought a year ago and rented out is making a handsome profit for investors. With property prices rising, landlords are making impressive capital gains as each month goes by too. In November, landlords chalked up £1,474 in capital gains on a typical rental property.”

LSL predicts that in 2010 landlords should expect to make £8,000 in rental income a capital gain of around 5%, equivalent to a capital return of around £8,000, bringing a total return of £16,000, or just below 10%.

Brown said: “2009 marked a watershed for the private rental sector, and landlords have had to ride out the economic storm. 2010 is likely to be equally critical with regulation of buy-to let mortgage lending set to be introduced. Regulation should help filter out unscrupulous mortgage advisers which will be positive for the sector. The downturn has already pushed many of the short-term investors out of the market too. Buy-to-let is an essential part of our housing market – we need well capitalised, experienced, professional landlords. With returns rising, they can once again look forward to investing more in the sector to meet our housing needs.”