Landlords with a property portfolio in London have seen their average annual rental income soar by 32.9% over the last 12 months, new research from Benham and Reeves reveals.
By contrast, landlords in England and Wales (outside of London) have seen their rental portfolio income increase by 8.7% in the past year.
The London lettings and estate agent compared the average rental portfolio income, based on portfolio size and rent values, in Q1 2022 compared to Q1 2023.
Previous research from Benham and Reeves revealed that throughout the nation, portfolio sizes have fallen by 5.6% year-on-year, dropping from 9.1 properties to 8.6.
However, despite smaller portfolios, the average rent value has increased by 15.1%, rising from £7,396 in the first quarter of 2022 to £8,510 in Q1 2023.
The most recent study shows 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%.
However, by some way the biggest income increase has been seen in London. The annual rental income generated from the average buy-to-let portfolio within the capital has increased by 32.9% and now sits 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 enjoyed a strong portfolio income increase of 32.7%.
Benham and Reeves says this is due to a huge increase in portfolio size, rising 6.4 properties to 9.2 in the past year.
Portfolio income has also increased in the South East (27.8%), Yorkshire & Humber (16.4%), the South West (15.5%), North West (5.5%), and North East (0.6%).
In three regions, however, landlords have seen their portfolio income decrease.
Wales has seen the most significant decrease of 19.2%. This comes despite the average rental income per property seeing the biggest increase of all regions (41.5%).
Benham and Reeves says this is being driven by the average portfolio size falling from 12.6 properties to 7.2.
The East Midlands has seen portfolio income fall by 11.1%, once again driven by a shrinking average portfolio size, down from 11.8 in 2022 to 7.8 in 2023.
The West Midlands has seen portfolios increase from 8.5 to 9.2, but a drop of 8.7% in income per property means that portfolio income has fallen by 1.2%.
Benham and Reeves Director Marc von Grundherr says: “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.”