The average buy-to-let investor in England and Wales earned a total return of £12,129 in the year to September, and that figure could double over the next 12 months.

According to the latest buy-to-let index from LSL Property Services, the average BTL investor enjoyed a total annual return of 7.4% in September, up sharply from 6.1% in August.

The total return of £12,129 comprises average rental income of £8,164 a year and a capital gain of £3,965. LSL said that figure could hit £23,028 in the next year, equivalent to a return of 13.6%, if rental and property prices continue to rise at the same pace as in the past three months.

Rents rose an average 1.8% in September to hit their highest-ever recorded level of £757 a month. That’s £13 per month higher than the previous all-time record, set in October 2012 when monthly rents averaged £744 across England and Wales.

Record rents also mirrored faster lettings activity. The number of new tenancies across England and Wales increased by 6.5% in September, and 9.2% over the past 12 months.

Rents increased in nine out of 10 regions in September, led by the South East, where rents rose 3.3% in a month. The North West saw a 2.7% monthly rise, followed by the West Midlands at 2.6%. The only region where rents fell in September was the East of England, with a 0.8% monthly drop.

David Brown, commercial director at LSL, said: “Landlords have benefitted from strong yield growth for some time but with such a reignited purchase market, there’s now more of a ferocious incentive to invest in the private rented sector than ever before.

"We expect rental yields to hit 5.5% by the middle of this decade – which alongside the recent trend for price rises, gives every indication the next 12 months are set to heat up even further.”

But rising rents are bad news for tenants, as Emma Reynolds MP, Labour's Shadow Housing Minister, explained: "As rents hit a record high, worsening the cost-of-living crisis, it is clear millions of tenants are paying the price of the David Cameron's failure to build enough affordable homes.

"The Government's housing and economic policies are making the housing crisis worse not better. Rather than face the reality and change course, the Tory-led government remains in denial. It just goes to show how out of touch they are with the everyday lives of millions of renters."