Paragon Bank research has revealed that levels of profitability reported by landlords in the third quarter of this year have hit their highest point since the first quarter of 2022.
A survey of over 700 landlords, carried out on behalf of Paragon by Pegasus Insight, showed that almost nine in 10 (87%) reported making a profit in Q3 2024, the highest since Q1 2022.
Overall profitability in the third quarter was seven percentage points higher than the same period in 2023, following successive quarterly increases over the past year.
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 gains
Net returns are highest amongst landlords operating in the East of England, with 90% recording making a profit, Paragon found.
Your Mortgage Awards 2024/25: winners revealed
Sponsored by Your Mortgage Awards
Above average levels of profitability were also achieved by lettings business owners in the South West and East Midlands, at 89% and 88% respectively.
Meanwhile, landlords that let 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.”