According to LSL Property Services, most residential landlords in the UK managed to make a profit in 2009 of £7,400pa thanks to market improvement over the last 12 months.

Despite the average landlord seeing capital drops in 2008 of £23,000 due to the dramatic decline in property values, in 2009 the loss was only £600. Although 2009 has proven to be a very challenging year, the current situation is much more hopeful than in late 2008 when landlords reported, on average, capital losses of £15,100.

LSL believes that landlords should expect to enjoy capital gains of approximately 5% in 2010 with the average yearly rental income in the UK per unit likely to remain at around £8,000. But there is the potential for a continued recovery in the real estate market which could push total annual gains up to nearly 10%.

According to LSL, it is realistic to expect house prices to increase by +5% over the course of 2010. However, the continued shortage of affordable mortgages as well as possible Government budget cuts aimed at controlling the deficit will limit the extent and speed of the recovery in the property and buy-to-let markets.