This is 3.2% higher than a year ago, roughly in line with inflation. Yields on buy-to-let property rose to 4.8%.

The total return from investing in buy-to-let over the last twelve months reached 10.6%, the highest level since LSL began compiling figures two years ago, despite a slight drop in house prices in February.

David Brown, spokesman for LSL, said: “The recovery in the South began much more quickly than in the North. The ripples from the housing downturn are still affecting the market in the North, whereas the South has been enjoying a new wave of optimism over the last year.

“The widening gulf in buy-to-let returns has been driven more by increasing property values than rapid rent increases. The picture on rents has been much more mixed with no particular regional pattern emerging. We would expect returns to improve in the north as the recovery in the South spreads out, but it may lag behind for a few months yet.”

Given the slowdown in the pace of house price increases, a landlord investing today can expect to make an annual return of 8.5% over the next twelve months, with a little more than half of that return coming from income and the balance from capital appreciation. This is equivalent to £14,000 on a typical property.

Sponsored

Episode 1: First-time buyers : Powered by Partnership podcast from Newcastle for Intermediaries

Sponsored by Newcastle for Intermediaries

Brown reminds landlords not to be too obsessed with capital appreciation. He added: “Rents not only provide a regular income on your investment, but unlike bonds or savings accounts where interest is eroded by inflation, rental income will grow over time, creating a shield against the rising cost of living.

“Landlords should look to balance their returns between a steady rental income and long term capital growth. Focusing on one at the expense of the other is a risky investment strategy. Over the long term, investment in buy to let must be underpinned by a strong yield.”