South London Landlords Increase Profits Despite Rising Costs and Red Tape!

In recent times, landlords across England and Wales have faced a myriad of challenges, including regulatory changes and economic pressures. However, new data suggests that rental incomes are on the rise, both nationally and specifically within London. In this blog post, we will explore these trends and what they mean for landlords in South London.

A recent study conducted by Benham and Reeves, a London-based letting agency, has revealed some noteworthy statistics. Over the past year, landlords in England and Wales have seen an 8.7% increase in rental portfolio income. The study compared rental incomes from Q1 2022 to Q1 2023 and identified several key factors contributing to this uptick.

Portfolio Size and Rental Values

While there has been a 5.6% reduction in the average size of rental portfolios across England and Wales, falling from 9.1 to 8.6 properties, average rental values have actually increased. The average rental value rose by 15.1%, from ￡7,396 in Q1 2022 to ￡8,510 in Q1 2023. Consequently, the typical annual portfolio income for landlords increased from ￡67,304 to ￡73,186.

Focus on South London

For landlords operating in London, the news is particularly encouraging. Despite a minor decrease in the average portfolio size from 7.6 to 7.5 properties, the average rental income per property increased substantially by 34.7%, to ￡13,095. This resulted in an annual income for the average London portfolio of ￡98,213, marking a 32.9% increase.

The East of England: A Point of Comparison

In the East of England, there was a 7.7% decrease in income per property. However, overall portfolio income rose by 32.7%, mainly due to an increase in the average portfolio size from 6.4 to 9.2 properties over the past year.

Expert Commentary

Marc von Grundherr, the Director of Benham and Reeves, provided some insights into the data. He suggested that while some landlords have reduced portfolio sizes due to external factors like government policy and rising mortgage rates, it may be prudent to reconsider such a decision. Particularly in London, rising rental values have more than compensated for the increased costs, including higher mortgage rates.

Conclusion

Despite the challenges presented by regulatory changes and economic factors, landlords in South London have opportunities for growth and profitability. The increasing rental values in London suggest a resilient market that may offer stability and potential for higher returns. It may be beneficial for landlords to evaluate the current market conditions comprehensively before making any major decisions about their property portfolios.

For more in-depth analysis and updates relevant to South London landlords, stay tuned to this blog. Also, drop me a line and pick my brains or use my free online valuation tool to get a ballpark figure!