Residential property landlords across the UK saw a 4.8% growth in the average monthly rent to achieve an average gross rental yield of 6.1% in 2011, according to new figures from the specialist BTL lender BM Solutions.

They report that strong demand for rental properties increased further last year with the average monthly rent climbing to £716 - up from the £682 figure recorded for 2010.

While average rental yields in 2011 were marginally lower than the previous year (6.2%), they remained buoyed by continued rental increases across much of the UK. Regionally, the highest rental yields in 2011 were in the North (7.0%), North West, Yorkshire and the Humber (both 6.3%), Wales (6.0%), West Midlands and the East Midlands (both 5.9%).

Greater London (4.8%), South West (5.0%), South East (5.2%) and East Anglia (5.3%) all registered gross yields below the UK average.

Commenting on the data Phil Rickards of BM Solutions said: “There is a very healthy demand for rental properties across the UK right now, which in part may be driven by the costs associated with buying a home, which for some, will only increase as the stamp duty holiday comes to an end. Average gross yields on a buy to let property have been just over 6% for the past two years, driven by growth in rents.

Mr Rickards also stated that average house prices are likely to remain “broadly flat” again this year, so buy to let landlords can again “expect little capital gain on their investment in 2012.”

While the national average monthly rent increased by 4.8% overall, there are more significant gains in regional areas. The largest increases in rents were seen in East Anglia (8.0%) and the North (6.9%) while the South East and Greater London recorded rises of 5.8% and 5.6% respectively but rents increased by less than 1% in Wales (0.1%) and Scotland (0.7%).

The average rent in Greater London remains significantly higher than elsewhere in the UK, at £1,212 per month. The average monthly rent in the capital is 69% higher than UK average of £716 and 41% above that in the South East (£858) – the next highest region. The lowest average rents are in Wales (£474 per month), the North and Yorkshire and the Humber (both £488 per month).

Average Rental Yield, Value and Rental growth by Region




Annual Rental Yield 2010


Annual Rental Yield 2011


Average Monthly Rent (£) - 2010


Average Monthly Rent (£) - 2011


Increase in average monthly rents

2010-2011

North East


6.5%


7.0%


457


488


6.9%

North West


6.2%


6.3%


509


525


3.0%

Yorkshire & the Humber


6.0%


6.3%


467


488


4.4%

West Midlands


5.7%


5.9%


519


539


3.7%

East Midlands


5.7%


5.9%


477


506


6.2%

East Anglia


5.4%


5.3%


567


612


8.0%

Greater London


4.9%


4.8%


1149


1212


5.6%

South East


5.1%


5.2%


811


858


5.8%

South West


5.0%


5.0%


684


710


3.8%

Wales


6.1%


6.0%


474


474


0.1%

Scotland


5.6%


5.6%


536


540


0.7%

UK


6.2%


6.1%


682


716


4.8%

Source: Birmingham Midshires