The third quarter of 2024 saw levels of profitability reported by landlords hitting their highest point since the first quarter of 2022.

Paragon Bank’s survey of over 700 landlords, conducted by Pegasus Insight, found that on average, 87% made a profit in Q3 2024, the highest since Q1 2022.

Overall profitability in Q3 2024 is seven basis points higher than the same period in 2023, following successive quarterly increases over the past year.

Paragon said that this figure is made up of 17% of landlords who report making a large profit and 70% a small profit, on average.

The proportion of landlords who made a loss fell during the quarter, down to 4% from 6% in Q2 and 8% during the same period last year. The remaining 9% of landlords broke even.

REGIONAL COMPARISONS

On a regional level, net returns are highest amongst landlords operating in the East of England, with 90% recording making a profit.

Above average levels of profitability were also achieved by lettings business owners in the South West and East Midlands, 89% and 88% respectively.

STUDENT PROFITS

Those letting to students were most likely to be profitable (91%), followed by families with children (88%) and couples (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.”