Nearly nine in 10 landlords are making a profit, according to new research for Paragon Bank, marking the highest level in almost five years.

The survey by Pegasus Insight found that 87% of landlords reported profits in the second quarter of 2025, up from 84% in the first quarter and just one percentage point below the 88% recorded in late 2020. The proportion has risen by 10 points since the same period in 2023, when profitability fell to a five-year low of 77%.

The share of landlords making a loss fell from 7% to 5% between the first and second quarters, while the proportion breaking even remained steady at 8%.

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 10 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.”

Profitability was lower among landlords who had encountered tenant difficulties in the past year. Those who reported arrears or property damage saw profits in 79% of cases, while 78% of those who had evicted a tenant were in profit.

Sedgwick said the figures indicated a possible link between profitability and stable landlord–tenant relationships. “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.”