New research shows that buy-to-let profitability has bounced back strongly, with average rental yields now at their highest levels in a decade.

The latest Landlord Trends report (Q2 2025) from mortgage market specialist Pegasus Insight reveals that the average rental yield has risen to 6.5%, matching the 10-year peak recorded in Q3 2024. Regionally, landlords in the North West, North East, and East Midlands are reporting the strongest returns, all averaging over 7%, while yields in London remain the lowest at 6.1%.

Profitability remains robust: 87% of landlords say they are making a profit, with 21% describing it as a “large” profit and 66% as a “small” profit. Only 5% report any loss, highlighting the resilience of the buy-to-let market despite ongoing regulatory and tax pressures.

The rebound comes as landlords face significant legislative changes. The Renters’ Rights Bill is expected to receive Royal Assent before the end of September, introducing measures such as the abolition of Section 21 “no-fault” evictions, the shift to open-ended tenancies, annual rent increase caps, and new tenant rights on pets and advance rent.

With only 14% of landlords reporting that they are fully aware of the Bill’s details, uncertainty is likely to influence investment and portfolio strategies in the months ahead.

Bethan Cooke, director at Pegasus Insight, 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.”