Buy to let income up despite rising costs and red tape

Landlords in England and Wales have seen their rental portfolio income increase by 8.7 per cent in the past year. 

That’s according to new research from London lettings agency Benham and Reeves, which compared the average rental portfolio income, based on portfolio size and rent values, in Q1 2022 with that in Q1 2023. 

Previous research by the agency reveals that throughout the country, portfolio sizes have fallen by 5.6 per cent year-on-year, dropping from 9.1 properties to 8.6. 

However, despite smaller portfolios, the average rent value has increased by 15.1 per cent, rising from £7,396 in Q1 2022 to £8,510 in Q1 2023.

As such, the average landlord’s annual portfolio income has increased from £67,304 to £73,186 over the same time period, an increase of £5,882 or 8.7 per cent. 

On a regional level, the biggest income increase has been seen in London. 

The average portfolio size in the capital has shown the slightest of declines from 7.6 properties to 7.5, but the average rental income per property has soared by 34.7 per cent to £13,095. This means that the annual rental income generated from the average buy-to-let portfolio within the capital has increased by 32.9 per cent and now sits at £98,213. 

Despite falling rent values leading to a 7.7 per cent decrease in the income per property, landlords in the East of England have enjoyed a strong portfolio income increase of 32.7 per cent. This is due to a huge increase in portfolio size, rising 6.4 properties to 9.2 in the past year. 

Director of Benham and Reeves, Marc von Grundherr, comments: “Some landlords have seen their potential profits hit hard by crass government policy making and increasing mortgage rates and this has led to many reducing the size of their portfolios, which has further reduced the annual income generated via buy-to-let portfolios. . 

“But we would suggest landlords think twice before offloading because, as we’re seeing across much of the country, rent values are increasing at quite a rate and have hit all time highs across the capital, in particular. This has been more than enough to offset other increased costs, such as a spike in mortgage rates. 

“With mortgage rates very unlikely to sink back to the incredible lows the nation has enjoyed in recent years, rental demand is only going to grow stronger, meaning that rental values should remain consistently strong.”