Data from the Association of Residential Letting Agents (ARLA) shows that houses in North West England are currently delivering the highest rental returns in England.
Rental returns in the in the North West have stayed relatively steady at 6% or above. Outside of England, houses in Scotland, Wales and Northern Ireland have also recorded broadly rising return values.
ARLA found that rental returns on houses in central London have been falling for the past six months, calculating that returns have fallen from 4% to 3.5% over this time period. It’s the second survey is the second in the past week to suggest that landlords should steer clear of London. Last week Move With Us said the capital was one of the worst places in the country to be a buy-to-let investor.
ARLA says that one reason for the difference in rental return rates could be the variation in capital values around the country. It found that the value of the average rental house in London stands at £1,251,000 compared to just £173,000 in the Midlands. Rented houses in Scotland, Wales and Northern Ireland have an average capital value of £197,000.
Rental figures for flats followed a broadly similar geographical pattern, with central London properties offering an average return of 4.1%, compared with returns of 5.2% and 5.8% in the North East and North West respectively.
The survey also showed the average void period – the time that a rental property remains vacant between tenants – remained steady at three weeks across the UK.
Ian Potter, managing director of ARLA, said: "Our data clearly shows that landlords around the UK must choose their rental property wisely to ensure they receive the returns they expect. I would always recommend using an experienced ARLA agent when letting a property as they will be able to give the most up-to-date insight into the local rental market.
"It may be that rental returns in a particular area come as a surprise to those not directly involved in the local market. As void periods have stabilised, landlords may have an easier job of forecasting returns once an indicative figure has been received. However, some untenanted time should always be factored in to any landlord's investment calculations."