Rising house prices leading to improved profits for landlords

The surge in house prices in 2014 has pushed up the total returns for landlords, new figures from Countrywide Residential Lettings indicate.

The average total return, taking into account yield and capital appreciation, is now 12.2 per cent up from 6.8 per cent 12 months ago.

Yields are responsible for only half of this return, the other half coming from rising house prices. Before May 2013, around 90 per cent of the average landlord’s return came from rent and the remaining among from capital appreciation of the property.

While average UK monthly rent has risen 4.6 per cent over the past year, Countrywide says rental growth has been driven mainly by the south of the UK.

Across almost all of Northern England average monthly rents have fallen, although Birmingham, Manchester and Leeds have seen strong growth.