Buy-to-let total returns

Property services company LSL has claimed that as a result of the recent declines in house prices, the total return from investing in buy-to-let over the last year dropped slightly to 10.1 per cent in July.

The average landlord would have made a total return of £15,961 in the last year, £8,706 in capital gains and £7,255 in rental income.

An investor buying property now could expect a total annual return of 3.5 per cent, the equivalent of £5,838.

However, these figures are likely to underestimate the real return made by many landlords. This is because landlords frequently target higher yielding properties where the ratio of rent to capital value is higher than for the average property.

What has also been seen over the last 12 months is the exodus of many of the accidental landlords who decided to rent their property out rather than sell into a depressed and falling market. Many of these landlords are now attempting to sell their property; resulting in the disappearance of the glut of properties and thereby forcing rents higher.

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