The report found the slimmest rental yields are found in London at an average of 4.8 per cent. This is despite the average rent standing at £1,417 per month in the capital – 102 per cent higher than the national average of £701.

Properties in the North and Yorkshire and Humber provide the biggest chance of higher yields, with both regions offering a 6.6 per cent return.

Renters in these areas pay roughly £500 per month, nearly a third of the price of people in the capital.

But house prices are even further apart. Recent figures from the Land Registry revealed the average property value in London is £409,881, compared to £98,292 in the North East.

This means more investors may be turning to the buy-to-let market for capital growth rather than seeking income from rents.

Yields have fallen as house values have risen. During the aftermath of the financial crisis, the reverse happened - as capital values plummeted, rents still went up.

Phil Rickards, head of BM Solutions, said: ‘Demand for rental accommodation remains strong, and in many regions this is outstripping supply which can lead to an upward pressure on rent prices.

‘However, our figures show that even with increasing rents, the average yield that investors are getting has remained static, which will be driven by the fact that the average price of a typical buy to let property has grown marginally faster that average rents.’

Overall, the average monthly rent paid in Britain increased from £674 per month in the second half of 2012 to £701 for the same period in 2013 – or a four per cent rise.

However, property prices have soared far faster according to a slew of house price indexes.

For instance, Halifax said last week that house values were up eight per cent in a year – double the growth of rents. It also said last month that properties have added more than £6,000 in value since December 2013.

 
Meanwhile, separate data from LSL Property Services, which owns the UK’s largest lettings agent, says booming house prices have resulted in a welcome ‘equity bonus,’ for existing investors.

London landlords saw annual returns of 14.6 per cent in the year to January 2014, up from 11.4 per cent in the previous twelve months.

This represents an average return of £38,104 per property in the capital – or more than five times the total return per property in areas such as the North East and Yorkshire & the Humber.

Across England and Wales, total annual returns on an average rental property grew dramatically in the past twelve months, to 8.9 per cent in January, up from 5.7 per cent in January 2013, largely through equity gain.

In absolute terms this represents an average return of £14,767, with rental income of £7,961 and capital gain of £6,806, according to LSL.

David Newnes, director of estate agents Your Move and Reeds Rains, part of LSL Property Services, said: ‘Rising prices are delivering an equity bonus for landlords – considerably boosting total annual returns.

‘Such equity growth is also an important factor for some landlords looking to remortgage existing properties to fund new purchases. 

‘As mortgage availability grows and rates seem set fair for the time being, many landlords will continue to expand their portfolios.’

BM Solutions found the average deposit put down in the second half of 2013 by investors was £49,146 for a typical property.