But profit margins fall for landlords dealing with tenant problems
Nearly nine in 10 landlords in the UK reported making a profit in the second quarter of 2025, according to new research commissioned by specialist buy-to-let lender Paragon Bank.
The study, conducted by Pegasus Insight, showed that 87% of landlords earned profits from their lettings, up from 84% in the previous quarter and just one percentage point below the five-year high recorded in late 2020.
The findings indicate a steady recovery from a five-year low in 2023, when only 77% of landlords reported profits. The proportion of landlords who said they made a loss fell from 7% to 5% between the first and second quarters of 2025, while the share of those breaking even remained unchanged at 8%.
“It’s encouraging to see landlord profitability nearing a five-year high, with nearly nine in 10 reporting making a profit,” said Louisa Sedgwick (pictured), managing director of mortgages at Paragon Bank. “This chimes with recent analysis of our own lending data which revealed that yields, a key determinant of profit, remained at almost their highest levels in over a decade.
“As well as reflecting the resilience of the sector, these findings highlight how continued demand for good quality, flexible housing means that buy-to-let property remains an attractive asset for landlords.”
Rising landlord profitability signals ongoing demand for buy-to-let mortgages and more business opportunities for mortgage brokers. However, brokers should advise clients on managing tenant risks and property costs, as these factors impact landlord profits too.
The research found that profitability was lower among landlords who had encountered tenant-related issues in the past year. Landlords who experienced arrears, property damage, or tenant evictions reported profit rates of 79%, compared to the overall average.
“It’s interesting to see that the data suggests there may be a link between profitability and harmonious relationships between responsible landlords and respectful tenants,” Sedgwick said. “This shows that it’s not always plain sailing for landlords.
“We know that landlords work hard and with the research also showing that, on average, they spend more than a fifth of their gross rental income running and maintaining their properties, the profits they make result from the time and money they put into providing good quality homes for renters.”
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