Rents may have risen in the private rented property sector in the UK over the last year, but professional landlords are feeling the pinch, according to the latest research.

The latest findings from the BDRC Continental quarterly Landlords Panel reveals the biggest rise in the number of portfolio landlords making a loss since the Landlords Panel began in 2006. The research shows that in the fourth quarter of 2011, the number of portfolio landlords, that is those with 20 or more properties, who reported making a loss rose from just 1% in the third quarter of 2011, to 8% in the last quarter of the year.

At the same time, while portfolio landlords enjoyed an increase in income, average rental yields for all landlords fell in the fourth quarter of 2011 to their lowest level in the year. This is despite 46% of landlords having increased their rents in the previous 12 months, with 34% planning to do so during the first half of 2012.

However, BDRC Continental’s research reveals that landlord sentiment remains upbeat about the prospects for the private rental sector, with 80% saying that they feel positive about being a landlord. This is in spite of around half of all landlords having experienced arrears over the last year, and may reflect the recent fall in the number of landlords reporting void periods (i.e. times when the property has no tenants).

‘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,’ said Mark Long, director of BDRC Continental. ‘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,’ he added.

(Note: data gathered from Q4 2011 BDRC Continental/NLA Landlords Panel study. Fieldwork took place 9th – 19th December 2011 and incorporated 550 online interviews with National Landlords Association members).