Why did landlords thrive in 2009?

Thanks partly to the strong bounceback in prices in the second half of the year, many landlords made significant profits in 2009, says a new survey.

The latest Buy-to-Let index from agents LSL Property Services, which owns the UK's largest lettings network including Your Move and Reeds Rains, says a typical landlord collected £7,909 in rental income and enjoyed capital gains averaging £4,831 - a total return of £12,740 for the year.

By contrast, 2008 saw a fall in capital value of £23,000, deferred by rental income of £7,900, to produce an overall loss of £15,100.

David Brown, LSL Property Services commercial director, said: "Despite the worst recession in living memory, and despite house prices continuing to fall for the first few months of 2009, investment returns in buy-to-let were very respectable.

"The £12,700 which the average landlord made on a rented property during the year recouped most of the losses in the crash of 2008.

"Brave landlords who added to portfolios will be celebrating an excellent year."

LSL also says rent arrears, accounting for 11.7 per cent of rent due, was down from the 14.5 per cent figure for 2008.

Unpaid rent totalled £282 million in December 2009, against £346 million in December 2008.

Mr Brown thinks landlords could do even better in 2010.

If prices keep rising at their current rate, the annual rise will be 4.9 per cent, and a typical landlord could make a total return of £16,000, a yield of 9.8 per cent, before mortgage payments are deducted.