Average rental income rose from £10,718 in September to £11,066 in October, the highest level ever, reports Paragon...

Average rental income rose from £10,718 in September 2007 o £11,066 in October, the highest level ever. Over the past year rents have increased by 10.2% on average.  Yields are steady at 6% - the same level as one, three and 12 months ago.  Total annual returns on a property purchased 12 months ago averages 15.5%, up from 14.2% in September.

• Rental growth is strongest in East Anglia, Greater London, East Midlands and the West Midlands.
  
  
• Yields are higher in northern parts of the country, averaging 6.7% in Yorkshire and the North West.
  
  
• The average property value is £183,555, 1.1% up on three months ago. 
  
  
• Over the past year property prices have risen by 9.5%. 
  
  
• Property values are highest in Greater London (£370,776) and lowest in the North and North West (£117,988 and £125,328 respectively).

Rental incomes

Rental incomes have risen by 3.2% to £11,066 in October and are 10.2% higher than the same period in 2006. Rents are highest in southern parts of the country, with Greater London at £20,084, the South West at £12,609 and the South East at £11,065. 

Yields

Yields continue to be stable, and have stood at around 6% for the past year. Average yields are slightly higher in northern parts of the country, with Yorkshire and the North West both averaging 6.7%, Wales and the East Midlands at 6.5%, and the North and West Midlands at 6.4%. 

Property values

Property values rose by 1.9% in October, with the latest national average standing at £183,555.  Property prices are 9.5% higher than a year ago.

Total annual returns

The average property purchased 12 months ago has generated an overall return of 15.5%, taking account of both capital gain plus rental income.  Total returns are highest in East Anglia (31.4%), Greater London (29.3%) and the East Midlands (24.0%).

Table 1: Total Annual Return (rents plus capital appreciation)

Property type

Terraced homes at 6.5% continue to outperform other property types (semis at 6% and detached at 5.8%).  Rents, at £15,251, are highest for detached property, however, reflecting their higher value.