The vast majority of landlords (85%) are continuing to report their lettings activity as profitable, new research by Pegasus Insight has highlighted.

This was according to the group’s latest Landlord Trends Q4 2025 report, although the figure was down from 89% in the preceding quarter.

Pegasus’ findings, based on 837 interviews with members of the National Residential Landlords Association (NRLA), also revealed a 2% uptick in those reporting a financial loss in Q4. Average achieved rental yields edged down to 6.4%, easing back from an average of 6.6% recorded in Q3.

Performance across the sector is also becoming increasingly “uneven”, Pegasus said. Landlords operating houses in multiple occupation (HMOs) continued to outperform the wider market in Q4, achieving higher average yields of 7.3%, which helped to offset slightly higher running costs and management complexity.

By contrast, landlords with standard property portfolios remained more exposed, with running costs still elevated.

“The key takeaway from Q4 is not that profitability has weakened significantly, but that it is becoming more uneven,” managing director and founder of Pegasus Insight, Mark Long, said. “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.”

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