The improvement in the average comes on the back of significantly higher returns in a number of regions, including the East Midlands (up from 35.8% to 53.2%), Wales (up from 43.3% to 52.3%), Yorkshire (up from 24.8% to 34.2%), the North (up from 37.9% to 39.8%) and East Anglia (up from 16.5% to 17.4%).
The return comprises a total of £31,207 (up from £29,607 last month), made up of £21,535 (£20,086 last month) in capital appreciation plus £9,672 (£9,521 last month) in rental income, on a property worth £127,329 (£125,246) at purchase.
John Heron, managing director of Paragon Mortgages, commented: "October saw a reversal of the downward trend in overall returns that began in August. An increase in property values across the majority of the country has contributed to a modest pick-up in overall returns made by landlords over the past 12 months. Investors are now making on average more than £31,000 gross on their buy-to-let properties."
The index also showed property values nationally firmed by 2.4%, to top £148,000 for the first time, with the average investment property now costing £148,864. Year-on-year, landlord property prices are 16.9% higher than a year ago.
Landlord rental incomes also rose in October by 3.2% from £9,606 to £9,911 and are now 2.5% higher than they were 12 months ago. On the back of this increase landlord yields also rose in October by 0.72% to 6.66%.
Heron continueed: "Following a slight decrease over the last few months landlord rental incomes have risen steadily since September, reaching the highest figure ever recorded in the Paragon Buy-to-Let Index at £9,911. Uncertainty in the owner occupier market has helped strengthen tenant demand as prospective buyers, many of whom are would-be first-time-buyers, are unable or unwilling to make the initial leap onto the housing ladder. Higher rental incomes have had a positive impact on yields – which have risen from 6.61% to 6.66%."
