For the past three months, buy-to-let properties have seen average rental returns of between 4% and 7% according to the Association of Residential Letting Agents (ARLA), signalling very little change over the period from war and economic worries.

The figures come from ARLA members responding to the June survey by the association. This quarterly survey of nearly five hundred firms specialising in lettings and residential management is the largest of its kind in the Private Rented Sector.

The report published today, shows that the weighted average value of houses purchased for investment is £294,900 and the weighted average for investment flats is £172,500.

However, these values range from £500,000 for houses and £313,400 for flats in Prime Central London to £234,900 for houses and £147,400 for flats in the rest of the South East. Away from the South East, average values are £169,300 for houses and £106,300 for flats.

Returns

Rental returns across both flats and houses average 5.5% (5.4% for the previous three months, to the end of February) in Prime Central London, 5.6% (5.8%) in the rest of the South East and 6.2% (6.6%) in the rest of the UK. The national average rental return is 5.8% (6.0%).

The regional figures for rental returns equate to average rents of £2,681 a month (£619 a week) in Prime Central London, £1,096 a month (£253 a week) in the rest of the South East and £875 a month (£202 a week) in the rest of the UK.

Voids

The average void periods have remained constant and are relatively short. They are still being reported as being in line with the period that has always been recommended as a ‘budgeted empty period’ to be included in all the calculations needed before making a buy-to-let investment decision.

Overall, the average void period experienced is reported as 29 days a year. The longest periods are in prime central London where properties are empty for an average of 36 days a year. In the rest of the South East, the average void is 27 days compared with 29 days for the rest of the country.

Severe oversupply

In Prime Central London, 80% of ARLA agents continue to report a severe oversupply of rental properties. In the rest of the South East, 51% report oversupply. Away from the South East, only 41% report oversupply.

A national average of 55% of all ARLA member agents reported oversupply compared with 56% in February. Most of this marginal improvement has come from the South East away from Prime Central London. Buy to Let properties make up an average of 46% of the portfolios held and managed by ARLA member agents.

Commented John Crossley, Chairman of ARLA:

"Very little has changed in the Buy to Let market in the past three months, despite the Iraq war and the continuing volatility of the financial markets.”

“The most significant factor is that there is no change in the average empty period. This should mean that, provided investors have taken the right advice and done their calculations correctly, they should have made a satisfactory long term investment."