Property Type Any House Flat/Apartment Bungalow Studio Land Commercial Other Location Any Harrogate Areas Wetherby Areas Bradford Areas Leeds Areas York Areas Halifax Areas Doncaster Areas Sheffield Areas Ilkley Areas Rent Per Month Min £100 £200 £300 £400 £500 £750 £1000 £1500   Max £200 £300 £400 £500 £750 £1000 £1500 £2000 £2500 No Limit Bedrooms Any At least 1 At least 2 At least 3 At least 4 At least 5 Furnishings Any Furnished Furnished/Unfurnished Part Furnished Unfurnished

Buy to let landlords see average rents rise but total returns fall

Rents rose for the 10th consecutive month but growth is slowed in the run-up to Christmas, according to a recent Buy to Let Index from LSL Property Services plc.

In November, the average UK rent rose to £692 per month, squeaking ahead of October's record high of £691.

The growth of 0.1 percent represents the smallest increase since rents began to rise in February.

However, recent rent increases seem to have ended in several parts of the country. The east of England and the east midlands reported falls of 3.1 percent and 2.4 percent in November, whilst rents dropped by 1.9 percent in the south east and by 0.6 percent in the north west.

The marginal monthly national gain was largely driven by rents rising by 1.8 percent in London, where they hit £992 per month, an increase of 9.2 percent in the last year.

The average yield rose slightly to 5 percent in November, thanks to increasing rents, contrasting with a slight decline in the value of an average rental property.

David Brown, commercial director of LSL Property Services plc, said: "In the run-up to Christmas, we tend to see the rental market slowdown somewhat. Tenants prioritise Christmas spending over setting aside money for moving home.

"But with the limitations placed on the supply of rental property by the lack of mortgage finance, rents have continued to increase, even though the rental market's peak season is behind us.

"Nevertheless, rent increases have begun to slow in several regions, and we expect this trend to continue across the country in December and January. However, the UK's buy to let market still faces a shortage in the supply of rental properties and we don't anticipate that the slowdown in rent rises will last long into 2011."

Following a slowdown in the annual growth of rental property prices, the total annual return on a property has fallen from its peak of 13.4 percent in May to 7.3 percent in November.

This is now the equivalent to £11,857 - £7,359 in rent, and £4,498 in capital gains.

According to LSL, an investor entering the market now could expect to make a total annual return of £3,433

Brown continued: "Returns are slowing as annual house price growth steadies. But investors are faced with a fantastic opportunity. With property prices beginning to dip, and yields improving, it is a great time for landlords to expand their portfolios and lock-in high rents. "Even off-peak, tenant demand has remained robust enough to lift rents and the chronic lack of affordable housing and mortgage finance for first-timers will continue to augment demand from tenants, keeping rents high in the long-term."

However, tenant arrears provided less positive news for landlords in November. Tenant finances were in worse shape than October, with 9.7 percent of all UK rent unpaid, rising from 9.3 percent in the previous month.

Unpaid rent totaled £231m across the UK in November, up from £221m in the previous month.

Brown concluded: "The one cloud on the horizon for landlords is tenant arrears. Without the timely cheque from tenants each month, landlords cannot pay their mortgages, and risk dipping into rainy-day funds or falling into mortgage arrears. And with public sector spending cuts set to take their toll on employment and tenant finances in the next year, it's crucial that landlords act quickly to nip potential issues with rent payment in the bud before they escalate."

The LSL Buy to Let index was compiled by analysing 18,000 rental properties and tenancies from around the UK to determine rents, arrears and voids. Figures for the whole country were inferred by scaling up from LSL's market share.