Despite surveys and research reporting higher rental yields for landlords this year, a new report states that over the last six months of 2013 average yields fell from 5.6% to 5.5%. This is being put down to the increases in property prices outweighing rent rises.  

A specialist lender who supplied the report also says that further house price increases will no doubt lower rental yields again.

The North, Yorkshire and Humber should bring the highest yields as both areas of the country are presently standing a 6.6% return. However the smallest yields are occurring within the Capital of just 4.8%.

Tenants in the North and Yorkshire and Humber are on average only paying £500 a month in contrast to renters in the capital who are on average paying £1,417.

The average house price in London £409,881 whilst in the North East  it is just £98,292 (figures supplied by The Land Registry).

Investors could therefore be shifting their emphasis from rental income and looking at a greater profit margin from capital growth.

Phil Rickards, head of the specialist lender, said: ‘Demand for rental accommodation remains strong, and in many regions this is outstripping supply which can lead to an upward pressure on rent prices.

‘However, our figures show that even with increasing rents, the average yield that investors are getting has remained static, which will be driven by the fact that the average price of a typical buy to let property has grown marginally faster that average rents.’