Despite experiencing steady annual growth in rental income, recent analysis from Open Property Group suggests that the average buy-to-let investor has been reducing the size of their portfolio by up to 27% across England and Wales.

Open Property Group conducted an in-depth examination of the latest data regarding buy-to-let portfolio sizes and their changes over the past year, focusing on both size and profitability.

The findings indicate that, on average, investors have scaled back their portfolios by 1.6%, holding an average of 8.5 properties. However, certain regions have seen more significant reductions, particularly Yorkshire and the Humber, where the average portfolio size has decreased by 27% to nine properties.

Similarly, the West Midlands and the South West have witnessed reductions of 19% and 13%, respectively, in portfolio sizes. The trend extends across other regions like the North East, central London market, East Midlands, and East of England.

Conversely, areas such as outer London, the North West, South East, and Wales have experienced growth despite the overall downsizing trend.

While rental income per property has risen by an average of 8.8% over the past year, there has been a concerning decline in profit margins, particularly evident in regions like the North West and central London, where the average rental yield has dropped by as much as 1%.

Jason Harris-Cohen, CEO of Open Property Group, commented, “Much has been made about the landlord exodus in recent times, and it’s fair to say that the severity of this trend has been largely exaggerated. However, the figures do suggest that while buy-to-let investors may not be exiting completely, they are reducing the size of their rental property portfolios."

Harris-Cohen continued, “In fact, buy-to-let investors are accounting for an increasingly larger segment of sellers looking to utilize the quick sale route, as they look to off-load part of their portfolio with minimum fuss or stress, having benefited from years of rental income and capital appreciation. With a reduction in capital gains tax fast approaching, we expect more investors will look to streamline their portfolios given that the cost of exiting is set to reduce, and who can blame them?”