Rental returns continue to rise As a result of improving property prices in October, landlords saw an average total annual return of 6.6% on a rental property, up from 5.9% in September. This represents an average return of 10,819 with rental income of 7,926 and a capital gain of 2,892, according to the latest Buy to Let Index from LSL Property Services plc. If rental property prices maintain the same trend as the last three months, the average investor in England and Wales could expect to make a total annual return of 4.3% per property over the next 12 months -- equivalent to 7,067 per property. The average yield on a rental property rose to 5.4%, compared to 5.3% in October 2011. "But there are grounds for caution. With the long-term headwinds facing the housing market, there's no guarantee prices will rocket upwards in the next few years, and steady rental income is crucial for an investor's return -- let alone to pay the mortgage. "In this context, it's even more important that landlords avoid void periods, and prospective investors who research the areas with the biggest rental demand before purchasing will do well." The total amount of rent late or unpaid fell to the lowest level since January 2011, with total arrears of 265m, down from 297m in September. This equates to 8.1% of all rent across England and Wales. Tenants saw average rents rise by 0.4% in October, the slowest rate of increase since May, according to the