Yields dip in March but rental returns hit 12%

Yields for a typical rental property saw no significant monthly change in March, but are down 0.3% on an annual basis.

Gross yields in March were 5.1% – the same as in February – but on a yearly basis yields were down from 5.4% in March 2013, according to the latest Buy to Let Index by LSL Property Services.

Despite yields dropping slightly, total annual returns have risen to 12% in the year to February, as price growth and fewer void periods have an impact.

This compares to just 5.1% in March 2013 – the largest annual total recorded since June 2010 when returns of 12.5% were possible.

The figures mean the average landlord in England and Wales stands to see returns of £19,647 across the past 12 months, with rental income accounting for £8,038 and capital gain of £11,609.

“Rental income is more reliable than ever before – with tenant arrears at half the level seen at the peak of the financial crisis,” explained David Newnes, director of estate agents Reeds Rains and Your Move, part of LSL Property Services. “Capital accumulation is providing a bonus for landlords and adding to total returns, yet this is underpinned by solid rental income.”