A study by property firm Countrywide showed landlords had seen a return of 12.2 per cent in May compared with 6.8 per cent 12 months ago. This figure is split evenly between rental income and capital appreciation of properties.

Landlords have hiked rents by 4.8 per cent in the past year across Great Britain with tenants in the South East (12.9 per cent) and Greater London (7.4 per cent) being hit hardest.

Other major cities such as Birmingham (3.9 per cent), Manchester (3.7 per cent) and Leeds (3.6 per cent), have seen rising rents in the past year, all three rising quicker than equivalent properties in the surrounding areas.

Only in two regions – the Midlands and the North – did rents fall in the past 12 months.

Rents in Central London look set to pass the £2,500 per month mark shortly after reaching £2,479 during May. Elsewhere rents in the South East (£1,184) and Greater London (£1,181) continue to grow above the £1,000 mark.

Nick Dunning, group commercial director at Countrywide, said: “Yield and prospects for capital growth are both important components of a rental property investment. When weighing up an opportunity would-be landlords need to balance both the achievable yield and the prospects for capital appreciation before striking a balance between the two.

“While total return forms the bottom line for landlords, landlords also need to take into account other practical considerations to ensure this return is realised. For instance, many landlords with smaller portfolios choose to purchase near to their own home in order to be able to manage or keep an eye on their property investment.

“Equally, for landlords looking to invest over a relatively short period of time, the ability to sell quickly is important to minimise void periods during the sale process and to realise value growth.”