Buy to let house price of £141,776. The price of the typical Buy to Let property in the UK increased by 7.3% over the year to June 2007 to an average of £141,776. BTL house price growth has risen slightly over the past year from 6.0% in June 2006.

Rental yield of 5.5% for BTL investors. UK BTL rental yields have fallen marginally over the past year to 5.5% in June 2007 from 5.7% in June 2006. Nationally, the average rent increased by 4.5% over the past year to £651 per month in June 2007, compared with £623 per month in June 2006.

Northern Ireland BTL investors see strongest gains. By region, total returns for BTL investors were highest in Northern Ireland (35.9%) over the year to June 2007, followed by Scotland (16.6%) and the South East (13.9%). The lowest total return for BTL investors over the past year has been in the East Midlands (9.6%).

Terraced houses best performing property type with 15.9% return. Terraced houses have been the best performing property type for BTL investors over the year to June 2007 with an average 15.9% total return. Terraced properties also have the lowest prices by property type with an average price of £116,884 for BTL investors at June 2007.

BTL house price growth likely to moderate over the next year. The BTL market is expected to see slower house price growth over the remainder of 2007. Higher interest rates, subdued real earnings growth and easing economic growth are predicted to cause house price growth to moderate. Lower capital appreciation, together with mortgage payments rising more quickly than rental income, are likely to constrain demand for BTL properties.

The fundamentals underpinning the BTL market are strong. Demand for private rented accommodation is expected to remain high due to a combination of the difficulties many young people face in being able to buy their own property, the ongoing significant increase in the student population and the substantial rise in immigration. These factors are expected to push rents higher in the short term and lead to continued capital appreciation over the long term.

KEY FINDINGS

Buy to Let Property Prices

Regionally, the biggest price increase over the past year in BTL property prices was in Northern Ireland (30.5%), followed by Scotland (10.1%) and the South East (8.4%).

Prices in Northern Ireland have been driven up sharply by a combination of a strong local economy, high levels of immigration, high demand for properties from second homebuyers and interest from investors in the Republic of Ireland.

The smallest regional increases over the past year were in the East Midlands (4.1%) and Wales (5.7%).
The average price paid for a BTL property is highest in Greater London (£257,494). This is 2.7 times higher than in the North where the average price is the lowest at £93,675.

The average price paid for a BTL property is above £100,000 in all UK regions, except for the North (£93,675). BTL property prices are above £150,000 in Greater London (£257,494), South East (£168,394), and the South West (£151,720).

Buy to Let Rental Values

Regionally, the biggest increase in rents over the year to June 2007 was in Northern Ireland (7.8%) and Scotland (6.3%). All regions recorded a rise in rents over the year to June 2007.

Rents are highest in London where they averaged £1,172 a month in June 2007. This is 57% higher than average rents in the second highest priced region, the South East (£748).

Rents in the North are the lowest at an average of £466 per month at June 2007, £706 per month lower than in the capital.

Buy to Let Rental Yields

BTL rental yields nationally have fallen marginally over the past year to 5.5% in June 2007 from 5.7% in June 2006.

Yields are lowest in Northern Ireland (4.5%) and the South West (5.1%).

Buy to Let Total Returns

By region, total returns for BTL investors were highest in Northern Ireland (35.9%) over the year to June 2007, followed by Scotland (16.6%) and the South East (13.9%).

The smallest total return for BTL investors over the past year to June 2007 has been in the East Midlands (9.6%), West Midlands (11.3%) and Wales (11.3%).

A year ago, BTL returns were again highest in Northern Ireland (30.2%), followed by the North (16.4%) and Yorkshire & the Humber (14.0%).

Buy to Let Property Type

Detached properties delivered the smallest total return for BTL investors, 10.7% over the year to June 2007.

Terraced houses saw the firmest house price growth by property type over the year to June 2007, an increase of 10.1%.

The average price paid by a BTL investor for a detached property was £224,335, 92% more than the average price of a terraced property, £116,884, the most inexpensive BTL property type.

The rental yield by property type is highest for flats (5.7%) and lowest for detached properties (4.7%).

Tim Crawford, Group Economist at Birmingham Midshires, said: "Total returns in the buy to let sector were a healthy 13.0% over the past year. Buy to let house price growth has edged higher over the past year, while rents continue to rise across the country, boosting returns. The fundamentals underpinning the buy to let sector remain sound. While house price growth in the sector is expected to be more subdued near term, reflecting the impact of higher interest rates, the potential for further increases in rents should encourage long term investors. There also remains the potential for healthy long term capital appreciation in the buy to let sector, particularly given the backdrop of more households being formed each year than there are new properties being built."