Average rental yields have returned to their highest levels in the last decade as buy-to-let (BTL) profitability rebounded strongly in Q2, landlord research from Pegasus Insight has shown.

The average rental yield across the UK stood at 6.5% in Q2, equal to the 10-year peak reached in Q3 2024.

Pegasus Insight’s findings, based on 794 interviews with landlords, also revealed that profitability was robust in Q2. The study revealed that 87% of landlords said they are currently making a profit, with 21% describing this as a “large” profit and 66% a “small” profit. By comparison, just 5% reported any form of loss.

Regionally, landlords in the North West, North East and East Midlands reported the strongest returns, all averaging above 7%, while yields in London remained lowest at 6.1%.

Director at Pegasus Insight, Bethan Cooke, said: “Yields at a 10-year high are a clear signal of the enduring strength of the private rented sector. Despite the significant challenges landlords have faced over recent years – from higher borrowing costs to shifting tax rules – the fundamentals of tenant demand and income generation remain robust. The fact that almost nine in 10 landlords are still making a profit demonstrates the sector’s ability to weather economic and policy storms.

“At the same time, the policy landscape is far from settled. The Renters’ Rights Bill represents the most significant set of changes in a generation, and while intended to protect tenants, it is also adding to landlord uncertainty.

“Our data shows landlords remain committed, but for many the coming 12 months will be a crucial period to review portfolios, financing and business models in light of what’s ahead.”

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