Some landlords are exiting the market as portfolio sizes have fallen by -5.6% year-on-year, from 9.1 to 8.6 properties.

However, despite the shrinking portfolio, annual portfolio income increased by £5,882 or 8.7 per cent from £67,304 to £73,186 over the same period.

Marc von Grundherr, Director at Benham and Reeves, said: "Some landlords have seen their potential profits hit hard by the government's heavy-handed policy making and rising mortgage rates, which has led many landlords to downsize their portfolios, further reducing the annual income generated from their buy-to-let portfolios.

However, we would advise landlords to think twice before selling as, as we have seen in most parts of the country, rental values are increasing at a considerable rate, particularly in the capital region, where they have hit record highs. This is more than offsetting other increased costs such as soaring mortgage rates.

With mortgage rates unlikely to fall back to the incredible lows of recent years, demand for rented accommodation is only going to get stronger, meaning rental values will remain consistently strong.

At a regional level, London has seen the largest increase in income. The average portfolio size in the capital fell slightly, from 7.6 to 7.5 properties, but the average rental income per property soared by 34.7% to £13,095. This means that the annual rental income from the average buy-to-let portfolio in the capital has increased by 32.9 per cent and now stands at £98,213.

Landlords in the East of England have enjoyed strong portfolio income growth of 32.7 per cent, despite falling rental values resulting in a -7.7 per cent reduction in income per property. This is largely due to a significant increase in portfolio size, which has risen from 6.4 to 9.2 properties over the past year.

Increases in portfolio income were also seen in the South East (27.8 per cent), Yorkshire and the Humber (16.4 per cent), South West (15.5 per cent), North West (5.5 per cent) and North East (0.6 per cent).

However, there were three regions where landlords' portfolio incomes have fallen over the past year.

Wales has seen the largest drop at -19.2 per cent. Whilst average rental income per property increased the most of any region (41.5%), this was largely due to the average portfolio size falling from 12.6 to 7.2.

The East Midlands region has seen a decrease in income of -11.1%, which is also driven by a reduction in average portfolio size from 11.8 units in 2022 to 7.8 units in 2023.

The West Midlands has seen an increase in portfolios from 8.5 to 9.2, but a fall of -8.7% in income per property means that portfolio income has fallen by -1.2%.