Countrywide letting index for 2012

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The data from Countrywide's 2012 lettings index was released on 22 January. The index comprises data on some 54,000 properties across England, Wales and Scotland that were sold and rented out through Countrywide in 2012.

The index showed that the average rental yield for this sample of properties was 6.2%. About one in two of the properties achieved a gross rental yield of over 7%; one in ten achieved over 10%. Regionally, the highest yields of 6.6% were in the Midlands, where the average monthly rent was £617.00. The lowest (5.75%) was in Scotland, where an average property cost £596.00 per month to rent last year.

The lowest average rents were to be found in the Midlands, the North of England and Scotland, and were well under those in London (where the average monthly cost to rent a property was £1,651.00). Interestingly, despite this vast difference in price, the discrepancy in rental yields was less than a percentage point, lending further credence to the 'North-South divide' observed in the industry; whilst properties in London and the South are significantly more expensive, the trend shows that they are in fact delivering slightly smaller profits.

This could in part be explained by the distribution of increased tenant demand across the country. 340,000 new tenants registered for private rented accommodation in 2012, showing an increase of 25% over 2011. Whilst the South of England recorded the highest volume of new tenants, the percentage growth in this region (27%) was significantly less than the highest regional growth (49%) in the North.

It could be suggested that, with house prices in the North being typically lower than elsewhere in the UK, this region has been the most recent to see a large influx of would-be first time buyers no longer able to afford the deposits for residential mortgages into the private rented sector. Burgeoning demand for rented accommodation has pushed up rents and rental yields, whilst low house prices and competitive buy to let mortgage products have allowed investors to take advantage of this demand.

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.