Most landlords remain in profit, but the gap between higher-yielding portfolios and more traditional models continues to widen.
Most landlords continued to report profitable lettings activity in the final quarter of 2025, despite a modest softening in returns, according to the latest Landlord Trends research from Pegasus Insight.
The Q4 2025 survey shows that 85% of landlords described their portfolios as profitable, down four percentage points on the previous quarter.
Over the same period, there was a two percentage point increase in the proportion reporting a financial loss, while average achieved rental yields edged down to 6.4%, from 6.6% in Q3.
Behind the headline figures, however, performance across the sector is becoming increasingly uneven. Landlords operating Houses in Multiple Occupation continue to outperform the wider market, achieving average yields of 7.3%.
These higher returns are helping to offset increased running costs and management demands associated with more complex property types.
By contrast, landlords with more traditional buy-to-let portfolios are proving more exposed as operating costs remain elevated and yields show signs of levelling off.
Mark Long, managing director and founder of Pegasus Insight, said: “The key takeaway from Q4 is not that profitability has weakened significantly, but that it is becoming more uneven. Overall returns remain close to recent highs, but the margin for error is narrowing for a growing proportion of landlords.
“We’re seeing a clearer separation between business models. Higher-yielding, more intensively managed portfolios, particularly HMOs, continue to provide a degree of insulation, while more traditional portfolios have less flexibility as costs and complexity remain challenging.
“The risk to buy-to-let landlords is not a sudden deterioration in performance, but a more gradual erosion of resilience.
“In an environment where yields are no longer rising, the ability to absorb further regulatory, operational or economic pressures will increasingly depend on the strength of landlords’ financial structures and the scale and mix of their property portfolios.”
