Research from BDRC Continental's quarterly Landlords Panel revealed while portfolio landlords reaped the highest rental yields at 7%, average rental yields for all landlords fell in Q4 2011to 5.9% from 6.7% in the previous quarter.
The last quarter of 2011 saw rental yields for all landlords fall to their lowest level in the year despite almost half (46%) of landlords having increased rents for tenants in the previous 12 months and one in three (34%) planning to do so during the first half of 2012.
However, BDRC said landlord sentiment remains upbeat about the prospects for the private rental sector, with 80% saying that they feel positive about being a landlord.
The research firm said this may be because the number of landlords reporting a recent void period in their property fell five percentage points - from 41% in the third quarter of 2011 to 36% in the fourth quarter.
But while half of landlords have experienced arrears, there is only a marginal difference in the number of landlords who are concerned about rental arrears in the next 12 months and those who are not.
Mark Long, director for BDRC Continental, said: “Unsurprisingly, in a difficult economy a larger portfolio of property brings greater exposure to risk and those landlords are clearly feeling the impact of rising costs and a decline in profitability.
"This is the highest level we have seen of landlords with 20-plus properties making a loss, and the biggest increase between one quarter and another. In previous waves of the research the highest figure of loss making for this group was 4% in the third quarter of 2009. Some landlords are clearly feeling the pinch.”
