In Focus: Home ownership  

Average buy-to-let portfolio rental return up 18% annually

Average buy-to-let portfolio rental return up 18% annually

The average landlord in the UK has seen an 18 per cent increase in their estimated total rental income in the past year, data has suggested.

With the average gross rental income up by a marginal 0.5 per cent to £7,891, the average buy-to-let investment portfolio is now returning an annual level of rental income of £63,917.

The data analysis from specialist rental platform Ocasa showed that the average buy-to-let investor has eight properties in their portfolio in 2022, up from seven properties in 2021. 

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The research analysed data on current gross rental incomes, the average number of buy-to-let properties in a portfolio and the total rental income per portfolio, as well as how these factors have changed over the last year. 

Ocasa's sales and marketing director Jack Godby said its findings showed the resilience of the sector.

“It’s great to see that, despite the UK government’s best efforts, the buy-to-let sector has really hit the ground running in 2022. 

“Like any area of the property sector, investment levels, property prices and rental values can vary drastically from one region to the next and this understandably has an impact on the size of a buy-to-let portfolio, the rent achieved per property and the overall return made. 

“However, it’s clear that strength is building across the market with respect to an increased level of income,” he said. 

London dominates the returns

Investors in Yorkshire and the Humber currently hold the largest portfolios with an average of 16 properties, followed by the North East and East Midlands with 11 each. 

Buy-to-let investors in Yorkshire and the Humber have also seen one of the largest increases in portfolio size, up 50 per cent year on year, second only to the South West where the average buy-to-let portfolio has increased by 69 per cent.

Central London has seen the third largest boost to buy-to-let portfolio sizes with a 43 per cent increase. 

“The fact that only two regions have seen the average portfolio size reduce is also testament to the resilience and consistency of bricks and mortar as an investment vehicle,” Godby added. 

Despite the fact the average portfolio size in central London is among one of the lowest at just 8.3 properties, investors in the area had not only seen the largest levels of rental income, but also seen the largest increase in this level of rental income. 

The average buy-to-let portfolio in central London delivers an estimated £93,890 in rental income per year, up 42 per cent annually. 

The South West has also seen a 42 per cent increase in the estimated rental income of the average buy-to-let portfolio, while the North West saw a 37 per cent increase.