The last twelve months have seen buy-to-let investors make a healthy average return of 13% thanks to rising house prices that have been able to boost otherwise falling rental returns.

Landlords were able to watch the value of their properties grow by an average of 7.3%, and received 5.5% in yield from rent on their properties in the year to June.

However, the warning is that predicted lower house price inflation and mortgage payments that are rising faster than rent will have an adverse impact on future buy-to-let returns and therefore demand.

The 13% return was an increase on the previous twelve months, which saw growth of 11.9%. House price inflation meant that capital growth was up from 6% to 7.3%, with yields from rent dropping from 5.7% to 5.5%.

A buy-to-let property is now worth an average of £141,776, and rents average £651 a month, up from £623 in the previous twelve months.

Although house prices have grown strongly it is likely that their growth will ease over the next two years as higher interest rates take their toll. However, further rent increases are likely, bringing enticements for long-term investors. It is also very likely that over the long term capital appreciation will be healthy as there are still not enough properties to satisfy demand.

The best returns for buy-to-let landlords are in Northern Ireland with 36% as the Province has seen the highest house price inflation in recent months at more than 50% in the last year. Scotland gave the next best landlord returns at 17%, then the South East with 14%. The East Midlands saw the poorest returns with less than 10% for investors on their capital. The best type of property was terraced house with average returns of 16%, and at an average value of £116,884 they were the cheapest type of property to buy.