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0:01 AM, 20th September 2023, About 8 months ago 5
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Landlords in England and Wales have earned more from their rental properties in the past year, a study reveals.
According to letting agents Benham and Reeves, landlords have seen their portfolio rental income increase by 8.7% in the past year.
But in London, the best performing region, income grew by an astonishing 32.9%.
That’s despite most landlords having smaller portfolios and facing higher costs and government pressure.
A director of 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 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.”
He added: “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.”
The study compared the average rental portfolio income, based on portfolio size and rent values, in the first quarter of 2022 with that in the first quarter of 2023.
It found that although portfolio sizes have fallen by 5.6% year-on-year, from 9.1 properties to 8.6, the average rent value has increased by 15.1%, from £7,396 to £8,510 per property.
As a result, the average landlord’s annual portfolio income has increased from £67,304 to £73,186 over the same period, an increase of £5,882 or 8.7%.
The study also looked at the regional variations in portfolio income and found that London had the biggest increase of 32.9%, from £73,944 to £98,213.
This was driven by a 34.7% increase in the average rental income per property, from £9,730 to £13,095, despite a slight decline in the average portfolio size from 7.6 properties to 7.5.
The East of England had the second highest increase of 32.7%, from £51,264 to £68,016.
This was due to a large increase in the average portfolio size in the region, from 6.4 properties to 9.2, which offset a 7.7% decrease in the average rental income per property, from £8,010 to £7,392.
Other regions that saw an increase in portfolio income were the South East (27.8%), Yorkshire & Humber (16.4%), the South West (15.5%), North West (5.5%), and North East (0.6%).
However, three regions saw a drop in portfolio income over the past year: Wales (19.2%), East Midlands (11.1%) and West Midlands (1.2%).
These regions had either a significant drop in portfolio size or a decline in rent values per property.
Paul Graville
10:23 AM, 20th September 2023, About 8 months ago
The title of this article is incorrect. It's the exact opposite of the contents of the article in fact!
It should read "Rents have gone up because of rising mortgage costs and increased wages".
And then it should say in the body of the article: despite rents going up landlord portfolio income has gone down significantly due to increased mortgage and other costs.
Teessider
10:29 AM, 20th September 2023, About 8 months ago
Portfolio income may have increased as suggested.
What about post tax profit (or loss)? Do we have figures for that?
Mark Hulbert
11:16 AM, 20th September 2023, About 8 months ago
Reply to the comment left by Teessider at 20/09/2023 - 10:29
Many landlords are running at a loss due to increased costs and Section 24.
Mark Hulbert
11:25 AM, 20th September 2023, About 8 months ago
Reply to the comment left by Paul Graville at 20/09/2023 - 10:23
Absolutely correct Paul. Agents have access to the gross income figures, perhaps net of any costs they arrange, but they have no idea of the costs of interest (mine have TREBLED to £20k pcm), cost of repairs arranged by the landlord, or the unreasonable taxation from Section 24. Many landlords are paying tax for "profit" on paper that they haven't actually made in reality. I now run at a loss - but will still pay tax of approx. £70k. Fair? - I think not.
DAMIEN RAFFERTY
16:09 PM, 20th September 2023, About 8 months ago
This is Mis information of the worst kind.
Why not start the article with the simple fact that BOE Interest rate has risen from 0.1% to 5.25% and possibly another 0.25/0.5% rise this week.
Yes Rents have risen but Landlord mortgage costs have more than doubled in the last 18 months