Landlord profitability surges to a two-year high

Landlord profitability has reached its highest point since the first quarter of 2022, according to research by Paragon Bank.

A survey of more than 700 landlords, revealed that nearly nine in 10 (87%) reported making a profit in the third quarter of 2024, a significant rise from the same period in 2023.

The data suggests a stabilisation of the market over the past 18 months.

A notable 17% of landlords reported substantial profits, while 70% reported modest profits.

Landlords have managed to remain profitable

The bank’s commercial director for mortgages, Russell Anderson, 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.”

Landlords renting to students

The proportion of landlords surveyed experiencing losses fell to 4% in Q3 2024, down from 6% in Q2 2024 and 8% in the same period last year.

Regional analysis indicates that landlords in the East of England experienced the highest net returns, with 90% reporting profitability.

Landlords in the South West and East Midlands also achieved above-average profitability, at 89% and 88%, respectively.

By tenant type, landlords renting to students were the most likely to be profitable (91%), followed by families with children (88%) and couples (87%).