The percentage of landlords who reported making a profit has reached its highest level since the beginning of 2022, research has revealed.
A survey of more than 700 landlords by Paragon Bank suggested that 87% of landlords made a profit during the three months from July to September of this year.
This is the highest percentage since the first three months of 2022.
Meanwhile, overall profitability in the third quarter of this year is seven percentage points higher than the same period in 2023.
It follows successive quarterly increases during the past year.
The figure is made up of 17% of landlords who report making a large profit and 70% a small profit, on average.
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In addition, the proportion of landlords who made a loss fell during the quarter, going down to 4% from 6% in Q2 and 8% during the same period last year.
The remaining 9% of landlords broke even.
Regional profits
On a regional level, net returns are highest among landlords operating in the East of England, with 90% recording making a profit.
Above-average levels of profitability were also achieved in the South West and East Midlands, at 89% and 88% respectively.
Meanwhile, an analysis of tenant type revealed that those letting to students were most likely to be profitable, at 91%.
This is followed by letting to families with children, at 88%, and couples, at 87%.
Russell Anderson, commercial director for mortgages at Paragon Bank, said: “While landlords have faced rising costs over the past two years, these findings support our belief that many have astutely managed their businesses to remain profitable and are now seeing improved returns.
“It’s likely that a key influence of this is the strong demand for rented homes against a backdrop of an improving economy as inflation has fallen.”
