Landlords made returns of over 30% last year, according to Paragon Mortgages.

This equates to areturn of £38,560 on an average property bought 12 months ago at £123,372, and compares with total annual returns of 20% or £22,137 in December 2003.

John Heron, managing director of Paragon Mortgages, said: “Landlords had a very good year in 2004 with their overall returns outstripping most other forms of investment. The average total return is over 31%, while in some regions it is significantly higher: 57% in Wales, 51% in the North and 44% in Yorkshire and the East Midlands.”

The report also said that property values nationally decreased by 0.30% during December 2004 to £152,834, but rental property prices remain at 23.88% higher than a year ago. Wales saw the greatest increase in property values over the year at 48.19%, closely followed by the North at 42.23%.

John Heron continued: “Landlord rental incomes have generally risen strongly over the year. 2004 saw the highest figure ever recorded in the Paragon Buy-to-Let Index at over £10,000. 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.”