The private rented sector in the UK remains robust despite facing various challenges. A recent study conducted by Foundation Home Loans in collaboration with Pegasus Insight reveals that a significant majority of landlords are still finding their rental activities profitable.
Key Findings on Rental Profitability
According to the research, 84% of landlords reported profitability in their lettings during the first quarter of 2026. This is a promising statistic demonstrating the resilience of the rental market. Moreover, average rental yields have increased to an impressive 6.5%.
Increased Portfolio Values and Rental Income
Additional insights indicate that both portfolio values and rental income have risen over the first three months of the year. This positive trend has boosted confidence among landlords, with 63% indicating plans to remain active in the sector. This figure shows an improvement from 58% in the previous quarter.
Landlords’ Long-term Plans
Landlords are actively planning for the future. The study found that 39% intend to refinance their properties within the next year. Additionally, average portfolio sizes have increased to 7.3 properties.
- 39% of landlords planning to remortgage in the coming year.
- Average portfolio size now at 7.3 properties.
Preparation for Regulatory Changes
In light of impending regulations, 62% of landlords with lower-rated Energy Performance Certificate (EPC) properties are preparing for improvement works. This proactive stance highlights their commitment to maintaining property standards.
Challenges Facing Landlords
Despite the overall positive outlook, some challenges persist. The demand for rental properties has softened, with 43% of landlords reporting void periods. Additionally, 30% have experienced rental arrears in the past year.
Looking Ahead
Despite these challenges, 61% of landlords plan to raise rents over the next year, with an expected average increase of 5.7%. According to Grant Hendry, Director of Sales at Foundation Home Loans, the current market presents both challenges and opportunities for landlords.
“While landlords face rising costs and regulatory changes, the fundamentals remain strong,” Hendry stated. He noted that the UK rental sector is evolving, not retreating, indicating a resilient market ready to adapt to new circumstances.
