UK landlords are ending the year in a stronger financial position than many had anticipated with profitability at its highest level since 2019 and rental yields reaching a new 10-year peak, according to new industry research.
Data from Pegasus Insight’s Landlord Trends Q3 2025 report shows that 89% of landlords are now operating at a profit, a six-year high.
Of those, 17% report making a large profit, while 72% say returns are modestly positive.
Only 7% of landlords say they are breaking even, with losses reported by a small minority.
REGIONAL DIFFERENCES
Rising rental yields have been a key driver of improved performance. Average gross yields reached 6.6% in the third quarter, surpassing last year’s previous decade high.
Regional disparities remain pronounced, with the North West recording average yields of 7.4% and Yorkshire and the Humber close behind at 7.2%, highlighting the continued importance of location in landlord returns.
Despite stronger current performance, confidence about the future has softened. Expectations for both yields and capital values declined quarter on quarter, down 3% and 4% respectively, suggesting landlords remain cautious as they assess the impact of economic uncertainty and further regulatory change.
CLEAR SIGN OF RESILIENCE
Mark Long (main picture, inset), Founder and Managing director of Pegasus Insight, says: “What really stands out in the Q3 data is the gap between how landlords are performing today and how they feel about the future.
“On the hard numbers, profitability and yields are the strongest we’ve seen for years, which is a clear sign of resilience in the sector.
“At the same time, confidence indicators have edged lower, which tells us landlords are remaining cautious rather than complacent.
ABILITY TO ADAPT
“Many are choosing to consolidate, focus on cash flow and manage their portfolios carefully, sensible behaviour in an environment where policy and cost pressures remain front of mind.
“As we head into the end of the year, the message from the data is that landlords have shown a real ability to adapt. The fundamentals of rental demand and income generation remain robust, even if optimism about the medium-term outlook is more muted.”
