Landlords in London have seen annual total returns increase to 14.6 per cent in the year to January 2014.

It represents an average return of £38,104 per property in the capital, which is more than five times the returns recorded in both the North East and Yorkshire and the Humber, LSL Property Services reveals.

Across England and Wales, average returns were £14,767, a year-on-year increase of 3.2 per cent.

“Rental yields remain historically high and such rental income is still underpinned by a demand-driven lettings market,” said David Newnes, director of estate agents Your Move and Reeds Rains, part of LSL Property Services.

He added landlords are also benefiting from an equity bonus thanks to rising house prices.

Mr Newnes expects landlords to increase their portfolios in the coming months as mortgage affordability continues to grow and interest rates look set to stay low for the foreseeable future.