According to research by an industry research company, 89% of landlords say their lettings are currently profitable — the highest proportion since 2019. Average rental yields have also climbed to 6.6%, marking a ten-year peak. Regionally, the North West leads with yields of 7.4%, followed closely by Yorkshire & Humber at 7.2%.
Despite regulatory pressures, brokers remain the preferred route for landlords, with 68% engaging intermediaries to benefit from specialist knowledge and expanded market access.
While profitability and yields have improved, landlord sentiment continues to weaken across all key indicators compared to a year ago. Looking to the next quarter, expectations for rental yields and capital growth have dipped by 3% and 4%, respectively.
Confidence in the broader UK economy remains especially low — just 2% of landlords say they feel optimistic, down from an already modest 3% this time last year.
A spokesman for the specialist lender says: “The numbers here paint an interesting picture, one that might seem contradictory at first glance
“Whilst the average landlord is seemingly doing the best since pre-pandemic days when it comes to profits and yields, what’s increasingly obvious is that many landlords still feel jittery about what the next few years will bring.”
New findings reveal widespread unease among landlords as the Renters Rights Act takes effect. Nearly three-quarters (73%) believe the legislation will negatively affect their rental operations, while 88% express broader concerns about its overall impact.
In addition to regulatory worries, tax fears are intensifying. A striking 92% of landlords say they’re concerned about the possibility of an 8% national insurance levy on rental income — a measure some expect to be announced in the Chancellor’s Autumn Budget.
The spokesman continues: “There’s work to be done to ensure the private rental sector remains a viable environment for both renters and landlords, and regulation must be implemented in a way that is fair, proportionate, and meaningful for all parties … we know that many landlords are concerned about unintended consequences of the Bill. That being said, there may be potential benefits for the countless good landlords operating in the market.
“Many of the measures could boost trust and satisfaction among tenants, leading to longer tenancies, fewer void periods and fewer rent arrears.
“Upgrading properties could also mean higher property values. Landlords are experts at overcoming regulatory hurdles and I’m confident they will adapt their strategy, knuckle down and thrive under the new rules.”