The prediction comes from LSL Property Services which also says that BTL investors saw annual returns increase from 6.1% in August to 7.4% in the following month.
LSL says the return comprises of £8,164 in average rental income a year and a capital gain of £3,965.
The firm added that if property prices and rents continue to rise at the same rate as they have done in the last three months, then landlords will see an equivalent return of 13.6% in the coming year.
Average rents in England hit record
The massive increase is being underpinned by rents going up by an average of 1.8% in September to hit a record level of £757 a month.
The figure now beats the previous record which was set in October 2012 when rents for England and Wales averaged £744.
However, it looks as though demand for rental properties is not going to subside any time soon as lettings activity is also on the increase.
In September, the number of new tenancies agreed in England and Wales rose by 6.5%. That means that over the past year new tenancies increased by 9.2%.
Best areas for rent increases
Landlords in the south-east saw rents rise by an average of 3.3% in September but they weren’t the only ones to enjoy a good month.
LSL says that rents in 9 out of 10 regions increased in September. They rose by 2.7% in the North West, by 2.6% in the West Midlands and the only area to see a fall was in the East of England with a 0.8% drop for the month.
David Brown, LSL’s commercial director, said: “There has been strong yield growth benefiting landlords for some time but with a reigniting purchase market, there’s now more incentive than ever before to invest in the private rented sector.”
He added that rental yields are predicted to reach 5.5% in the next two years and with the recent run of property price rises, those figures are expected to heat up even further in the coming year.
Rising rents aren’t all good news
While rocketing rents and improving yields are good news for property landlords, they aren’t such good news for tenants, says Labour's Shadow Housing Minister, Emma Reynolds MP.
She said more affordable homes needed to be built to combat record rent level highs and the increasing cost of living.
Labour also say the situation for tenants paying their rent late is now a serious problem with around £31 million outstanding and increasing rents are not helping that situation.
