Buy-to-let (BTL) landlords in England and Wales have seen an increase of 8.7% in their rental portfolio income in the past 12 months, Benham and Reeves has found.

The London lettings and estate agent has compared rental portfolio incomes, based on size and rent values, between the first quarters of 2022 and 2023.

Despite the increase in rental portfolio income, portfolio sizes across England and Wales have fallen by 5.6% year-on-year, dropping from 9.1 properties per landlord to 8.6.

However, the average rent value has increased by 15.1%, rising from £7,396 in Q1 2022 to £8,510 in Q1 2023.

The average landlord’s annual portfolio has also grown by 8.7% from £67,304 to £73,186 over the same period, an increase of £5,882.

On a regional level, the biggest income increase has been in London. Although the average portfolio size has fallen slightly from 7.6 properties to 7.5, the average annual rental income per property has surged 34.7% to £13,095.

This means that the annual rental income generated from the average BTL portfolio in the capital has increased by 32.9%, now sitting at £98,213.

Despite falling rent values leading to a 7.7% decrease in the income per property, landlords in the East of England have seen a strong income of 32.7%. This is a result of an increase in portfolio size, rising 6.4 properties to 9.2 properties.

Portfolio income has also increased in the South East (27.8%), Yorkshire and Humber (16.4%), the South West (15.5%), North West (5.5%) and North East (0.6%).

Wales has seen the most significant decrease in portfolio income over the past year, falling by 19.2%. The East and West Midlands have also seen portfolio incomes decrease by 1.1% and 8.7% respectively, despite the latter seeing the average portfolio size increase from 8.5 properties in 2022 to 9.2 in 2023.

The East Midlands saw average portfolio sizes fall from 11.8 last year to 7.8 properties per landlord.

Director at Benham and Reeves, Marc von Grundherr, said: “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 BTL 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.”

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