"The key takeaway from Q4 is not that profitability has weakened significantly, but that it is becoming more uneven"
- Mark Long - Pegasus Insight
The latest Landlord Trends Q4 2025 research from Pegasus Insight shows that 85% of landlords continue to report their lettings activity as profitable, down slightly (-4%) on the preceding quarter. There was a 2% uptick in the proportion reporting a financial loss in Q4 while average achieved rental yields edged down to 6.4%, easing back from the average of 6.6% recorded in Q3.
Performance across the sector is becoming increasingly uneven. Landlords operating Houses in Multiple Occupation (HMOs) continue to outperform the wider market, achieving materially higher average yields of 7.3%, helping to offset slightly higher running costs and management complexity. By contrast, landlords with standard property portfolios are more exposed as costs remain elevated.
“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," comments Mark Long, managing director and founder of Pegasus Insight (pictured).
He added, “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.”
