The percentage of landlords reporting a profit from their letting activity is at its highest level since 2019, new research from Pegasus Insight has revealed.
A survey of 872 landlords found that 89% are in the black, with 17% of these making a ‘large’ profit.
While the rest of the 89% are making a ‘small profit’, just 7% of the overall sample are breaking even.
This improvement in profitability is being supported by a continued uplift in rental yields. In the third quarter, Pegasus found that the average achieved gross rental yield reached 6.6% which surpassed a previous 10-year high recorded last year.
Landlords operating in the North West (7.4%) and Yorkshire and the Humber (7.2%) delivered the strongest returns.
While the financial picture has strengthened, Pegasus research also shows a softening in forward-looking sentiment. Expectations for future yields and capital gains both dipped quarter on quarter, down 3% and 4% respectively, reflecting ongoing caution in the PRS.
“As we head into the end of the year, the message from the data is that landlords have shown a real ability to adapt,” said Mark Long, founder and managing director at Pegasus Insight (pictured above).
“The fundamentals of rental demand and income generation remain robust, even if optimism about the medium-term outlook is more muted.”
