Levels of landlord profitability highest for two years

The research, which surveyed over 700 landlords, found on average, almost nine in 10 (87 per cent) of respondents reported making a profit in Q3 2024.

This represents the highest level of landlords reporting profitability since the first quarter of 2022.

These findings were explained by Paragon Bank commercial director for mortgages, Russell Anderson, who said: “These findings support our belief that many landlords 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.”

The research also found that, acting as evidence of the market’s stabilisation over the past 18 months, overall profitability in Q3 2024 is 7 percentage points higher than the same period in 2023.

This figure is made up of 17 per cent of landlords who report making a large profit and 70 per cent a small profit, on average.

Additionally, the proportion of landlords who made a loss fell during the quarter, down to 4 per cent from 6 per cent in Q2 and 8 per cent during the same period last year.

The remaining 9 per cent of landlords broke even.

Paragon also analysed its data at a regional level, revealing that net returns are highest among landlords operating in the East of England, with 90 per cent of landlords operating in that area making a profit.

Meanwhile, above average levels of profitability were also achieved by letting business owners in the South West and East Midlands, 89 per cent and 88 per cent of whom reported profitability respectively.

Additionally, Paragon’s tenant type analysis showed that those letting to students were most likely to be profitable, followed by families with children, and couples.

tom.dunstan@ft.com

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