Profitability levels reported by landlords in Q3 2024 hit the highest point since Q1 2022, Paragon Bank research has found.

The bank’s survey of over 700 landlords showed that on average, 87% reported making a profit in the latest quarter.

Paragon said this acts as evidence of the “market’s stabilisation” over the past 18 months, with overall profitability in Q3 being seven percentage points higher than the same period in 2023, following successive quarterly increases over the past year.

This figure is made up of 17% of landlords who said they made a large profit and 70% who made a small profit, on average.

The proportion of landlords who made a loss fell during the quarter, down to 4% from 6% in Q2 and 8% a year prior. The remaining 9% of landlords broke even.

Paragon also revealed that on a regional level, net returns were highest among landlords operating in the East of England, with 90% recording a profit.

Above average levels of profitability were also achieved by letting business owners in the South West (89%) and East Midlands (88%).

Meanwhile, the study suggested that those letting to students were likely to be profitable (91%), followed by families with children (88%) and couples (87%).

Commercial director for mortgages at Paragon Bank, Russell Anderson, said: "While landlords have faced rising costs over the past two years, these findings support our belief that many have astutely managed their businesses to remain profitable and are now seeing improved returns.

"It’s likely that a key influence of this is the strong demand for rented homes against a backdrop of an improving economy as inflation has fallen."

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