Landlord profits hit six-year high but confidence slips

Landlords across the UK are reporting their best profits and yields in years, even as confidence in the market continues to waver, research from Aldermore shows.

According to the findings, 89% of landlords are currently making a profit from their rental properties, the highest level since 2019.

At the same time, average yields have risen to 6.6%, marking a 10-year peak.

Investors in the North West and Yorkshire and Humber are seeing the strongest returns, with yields of 7.4% and 7.2% respectively.

Results appear contradictory

The lender’s director of mortgages, Jon Cooper, said: “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.”

He added: “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.”

Landlord confidence falls

Yet despite the strong yield performance, optimism among landlords has taken a downturn, Aldermore says.

Confidence levels have slipped across every major indicator compared to last year, with expectations for yields and capital growth down by 3% and 4% respectively.

Only 2% of landlords said they felt positive about the wider economy, compared with 3% in 2024.

The study also found that most landlords continue to rely on brokers, with almost seven in 10 (68%) using intermediaries to help them navigate lending options and the increasingly complex market.

Landlords worry about the RRA

Aldermore’s research also highlights that nearly three-quarters (73%) fear that the Renters’ Rights Act will have a negative impact on business.

Nearly nine out of 10 landlords (88%) are generally concerned about the introduction of the legislation.

Elsewhere, more than nine in 10 landlords (92%) are concerned about the potential 8% national insurance tax on rental income, which may come in the Chancellor’s Autumn Budget.

Mr Cooper said: “We know that many landlords are concerned about the 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.”

He adds: “Upgrading properties could also mean higher property values.”