Buy-to-let properties outside London and the South-east can provide double the rental returns seen in the capital, according to the Association of Residential Letting Agents.
Although average rental returns across the country have fallen from 7.6 per cent to 7.3 per cent in the last six months, one in 10 Arla member is reporting returns of up to 15 per cent in areas other than the South-east.
The average price of a buy-to-let property in the South-east is £168,800 compared with £92,000 nationally.
Arla says the price difference may be changing as values of investment properties in the South-east in the first six months of 2001 rose by 8.1 per cent compared with 9.1 per cent in other areas.
However, rental properties in the South-east remain more in demand than elsewhere, with the average time that houses are left empty between tenants standing at 21 days compared with the national average of 33 days.
Arla says the results show better rental returns can be achieved from investing in cheaper properties in a market which has been boosted by the increasing popularity of buy-to-let borrowing.
Spokesman Malcolm Harrison says: “This shows that the private rental sector is firmly back on its feet after its all-time low of a decade ago and that rental demand is able to match investment landlords' expectations.”