Landlord rental returns hit 12.2%

by Aaron Strutt

Jun 12 2014

Rising house prices in the first half of 2014 have driven up total returns for landlords. The average total return, taking into account both yield and capital appreciation, is now 12.2% - up from 6.8% a year ago - according to Countrywide Residential Lettings.

Prior to May 2013, sub inflation house price growth meant that around 90% of the average landlord’s return came from rent and the remaining 10% from capital appreciation of the property. Over the past decade, rent has accounted for 75% of returns with capital appreciation accounting for the remaining 25%.

Commenting on the findings Nick Dunning, Group Commercial Director, Countrywide plc, said: “Yield and prospects for capital growth are both important components of a rental property investment. When weighing up an opportunity would-be landlords need to balance both the achievable yield and the prospects for capital appreciation before striking a balance between the two.”