Maintenance and tenant issues put pressure on landlord profits

Nine in ten landlords reported making a profit, but many spend a significant portion of their gross rental income maintaining their properties, Paragon Bank claims.

Whilst some landlords reported making a profit, a survey by the bank reveals profits have fallen for landlords dealing with tenant problems such as eviction and rent arrears.

The bank also reveals landlords spend more than a fifth of their gross rental income running and maintaining their properties.

Encouraging to see landlord profitability hitting a five-year high

The research, carried out by Pegasus Insight on behalf of Paragon Bank, found that the proportion of landlords reporting a profit from their lettings activity increased from 84% in the first quarter of 2025 to 87% in the second quarter, hitting a five-year high.

This is just one percentage point below the previous five-year high of 88% recorded in Q4 2020.

Louisa Sedgwick, managing director of mortgages at Paragon Bank, said: “It’s encouraging to see landlord profitability nearing a five-year high, with nearly nine in ten reporting making a profit. 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.”

Landlords work hard

However, the survey reveals that profitability was lower among landlords who reported experiencing arrears in the past 12 months (79%), those whose property was damaged (79%), and those who had to evict a tenant (78%).

Ms Sedgwick added that many landlords spend more than a fifth of their gross rental income maintaining their properties for tenants.

She said: “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.

“This shows that it’s not always plain sailing for landlords. We know that they 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.”