The UK's landlords are finishing the year in stronger financial shape than expected, with profits at their highest level in six years and yields reaching a 10-year high.
That's according to Pegasus Insight and its latest Landlord Trends Q3 2025 study which shows 89% of landlords are now in profit.
Nearly one in five landlords describe those returns as large, while most others report more modest gains.
Only a small share say they are breaking even, and losses are now rare.
Landlords are adapting
The founder and managing director of the firm, Mark Long, said: "As we head into the end of the year, the message from the data is that landlords have shown a real ability to adapt.
"The fundamentals of rental demand and income generation remain robust, even if optimism about the medium-term outlook is more muted."
The data shows that it is rising yields are doing much of the heavy lifting with average achieved gross return reaching 6.6% during the third quarter.
That overtakes last year's previous decade high.
However, performance remains uneven by location with the North West posting yields of 7.4%.
Yorkshire and the Humber is close behind at 7.2%.
Landlord confidence drops
Despite the financial good news, landlord confidence in the private rented sector is still falling.
Pegasus says that expectations for future yields slipped 3% quarter on quarter, while optimism around capital growth fell by 4%.
Mr Long said: "What really stands out in the Q3 data is the gap between how landlords are performing today and how they feel about the future.
"On the hard numbers, profitability and yields are the strongest we've seen for years, which is a clear sign of resilience in the sector."
He added: "At the same time, confidence indicators have edged lower, which tells us landlords are remaining cautious rather than complacent.
"Many are choosing to consolidate, focus on cash flow and manage their portfolios carefully, sensible behaviour in an environment where policy and cost pressures remain front of mind.”
Landlord confidence affecting investment
The issue of landlord confidence has also been reflected in research from property consultancy Carter Jonas.
It has found that 80% of portfolio owners not planning further purchases in the near term.
They point to regulatory complexity and stretched finances continue to weigh on decisions.
Only 14% intend to expand and 'accidental landlords' making up the largest share of would-be buyers.
The firm's head of residential, Lisa Simon, said: "Landlords are cautious, but our findings show where progress is possible.
"Clear rules, proportionate standards and practical reliefs can unlock investment, particularly among 'accidental landlords' who are choosing to stay the course."
Strong student tenant demand
Simon Thompson, the managing director of Accommodation for Students, said: "Student landlords have benefited from very strong rental demand, which has helped underpin yields even as costs have risen.
"What we're seeing now is a more cautious mindset, where landlords are focused on protecting cash flow rather than chasing growth."
He added: "The fundamentals of student demand remain solid, but landlords need to be realistic about future pressures.
"Those who understand their local market and manage portfolios carefully are best placed to weather what comes next."
