Rental Yields Hold Steady as 84% of Landlords Remain Profitable

Editor's note: This brief was summarised by The Property AI Team from a report by Mortgage Strategy. Read the original article for full details.

Rental Yields Stable, Majority of Landlords in Profit

Average rental yields in the UK remained steady at 6.5% in the first quarter of 2025, according to new data from Pegasus Insight. The report also found that 84% of landlords were profitable during this period.

The data shows that the average gross rental yield was almost unchanged from 6.4% in the previous quarter. Houses in multiple occupation (HMOs) continued to outperform other property types, achieving an average gross yield of 7.6%.

Regionally, the North West delivered the strongest returns, with average yields of 7.1%. In contrast, London landlords saw the lowest average yields at 5.3%, reflecting higher property prices relative to rental income in the capital.

Landlord Profitability and Tenant Trends

While 84% of landlords reported profitability in Q1 2025, this marks the second consecutive quarterly decline, down from 85% in Q4 and 89% in Q3 2025. However, the proportion of loss-making landlords decreased to 4% in Q1, compared to 6% in the previous quarter.

The survey also highlighted strong tenant demand, with 58% of landlords reporting robust interest from renters. Separate research based on 3,000 interviews with private renters found that tenants have stayed in their current properties for an average of 5.3 years, a figure that has been gradually increasing. Two thirds of tenants plan to remain beyond their current agreement, intending to stay for an additional 4.3 years on average. Only 17% of tenants plan to leave, mostly due to personal circumstances such as relocating or upsizing, rather than dissatisfaction with their tenancy. Over two thirds rated their recent rental experience as positive.

These findings provide relevant context for letting agents and inventory clerks, highlighting ongoing stability in rental yields and tenant occupancy, as well as regional differences in returns.