Rental income is stable and 84% of landlords are profitable: Pegasus – Home Buying Strategy
The average rental yield held steady at 6.5% in the first quarter of this year and 84% of landlords remain profitable, new data shows.
The latest data from Pegasus Insight which tracks total rents found that the rate was almost unchanged from 6.4% in Q4 2025.
Owners of multiple occupations (HMOs) continue to perform very well, achieving an average yield of 7.6%.
The survey also revealed that 58% of landlords reported strong demand for rentals.
Even though 84% of landlords reported that their rental activity is profitable, this marks the second consecutive quarterly decline, down from 85% in Q4 and 89% in Q3 2025.
However, the number of homeowners making losses fell to 4% in Q1, down from 6% in Q4 2025.
At a regional level, the North West produces the strongest returns, with an average yield of 7.1%, while London-based landlords continue to earn the lowest, at 5.3%, reflecting the capital’s high property prices relative to rents.
A separate study based on 3,000 interviews with private employers, found that the average employer has now been in their current position for an average of 5.3 years, a number that is steadily increasing.
Two out of three say they plan to stay longer than their current contract, aiming for another 4.3 years on average.
Only 17% of tenants plan to leave their current property, with most citing personal circumstances such as moving or upsizing rather than dissatisfaction with their employment.
More than two-thirds rated their recent hiring experience as good.
Pegasus Insight founder and director Mark Long says: “The firming of the yield at 6.5% is a more encouraging sign than it might first appear.
“It comes after a period of gradual softening, suggesting the sector has found a level of balance, at least for now, as regulatory complexity and cost pressures continue to intensify.
“What the data consistently shows is that profitability is increasingly a function of portfolio composition.
“HMO landlords, those with larger holdings and those operating through limited company structures continue to show resilience, while many traditionally built positions have little resistance as costs continue to rise.
“The employer image provides a really important context here.
“Longer tenure, stronger satisfaction among those with direct relationships with landlords, and continued intent to stay all point to a more stable housing environment than the regulatory debate would suggest.
“For lenders and investors, that fundamental stability is an important part of the buy-to-let investment story.
“The challenge of this sector is to convert that structural stability into continuous confidence.
“With home owner sentiment still subdued and money laundering continuing to outpace property purchases, supply remains under pressure.
“How the market reacts to the Tenants’ Rights Act coming into effect will be the defining question of the coming year.”
