The majority of buy to let landlords are continuing to make a profit from their rental properties despite rising operating costs, mortgage expenses and regulatory pressures, according to ModaMortgages’ analysis of new research from Pegasus Insight.
The specialist lender’s analysis of the latest Landlord Trends report* found that 85% of landlords are making a profit from their lettings activity, including 17% who describe their returns as a large profit. Meanwhile, just 4% say they are making a loss, with 11% breaking even.
Average gross rental yields remain unchanged at 6.4%, maintaining the levels recorded over recent quarters.
The findings point to the continued resilience of the buy to let market, even as landlords contend with a more challenging operating environment.
The research suggests that profitability has remained consistent over time. Since the beginning of 2020, the proportion of landlords reporting a profit has generally remained above 80%, apart from a period of pressure following the initial increases in mortgage rates during 2023.
However, the latest findings reveal a considerable difference between landlords remaining profitable and those achieving the returns they enjoyed previously.
Financing costs appear to be an important dividing line. Among landlords who own their portfolios outright, 93% say they are making a profit, compared with 79% of those with buy to let borrowing.
The report also highlights the scale of expenditure associated with maintaining rental properties.
Maintenance, upkeep and repairs represent the largest category of expenditure for both houses in multiple occupation (HMOs) and other rental properties.
Average annual operating expenditure is £17,665 for non-HMO portfolios and £28,168 for HMO portfolios, with maintenance and repairs accounting for 39% and 27% respectively.
Despite these pressures, the continued prevalence of profitable portfolios suggests that rental property remains a viable investment for many landlords, although careful management of costs and financing is becoming increasingly important.
Becki Fraser-Tucker, Head of Sales at Moda Mortgages, said: "Landlords have had plenty thrown at them over the last few years. Mortgage costs have risen, maintenance bills have increased and the regulatory burden has continued to grow. So, against that backdrop, the fact that 85% are still turning a profit is a powerful indication of just how resilient the buy to let market remains.
“Of course, making a profit and achieving the returns enjoyed a few years ago are two different things. For many landlords today, it’s about working a little harder to protect their margins, keeping a close eye on costs and making sure their finance is still working as effectively as it can for their portfolio and longer-term plans.
“It’s encouraging to see rental yields holding relatively steady, but yield is only one part of the picture. Mortgage payments, maintenance, insurance and the everyday costs of running a property all have to come into the equation.
“What these figures show, though, is that buy to let is far from having lost its appeal. Well-run portfolios are still generating positive returns and there are still opportunities out there. In a more demanding market, having the right mortgage solution and good professional advice behind you can make a real difference.”
* Source: Pegasus Insight Landlord Trends report Q3 2026
