Rentals Still Profitable for 84% of Landlords

Why It Matters

The data underscores the private rented sector’s resilience, signalling continued investment and upward rent pressure even as regulatory and cost challenges mount.

Key Takeaways

• 84% of landlords reported profit in Q1 2026
• Average rental yield rose to 6.5% across the sector
• Portfolio size grew to 7.3 units per landlord
• 39% plan to remortgage within 12 months
• 61% intend to raise rents about 5.7% next year

Pulse Analysis

The private rented sector (PRS) in the United Kingdom is proving its durability amid a backdrop of higher financing costs and tightening regulations. Profitability for 84% of landlords in the first quarter of 2026 reflects a market where rental yields have nudged upward to 6.5%, outpacing many other asset classes. This resilience is partly driven by chronic housing shortages and strong demand for flexible tenancy options, which keep rent levels buoyant despite broader economic headwinds.

Landlords are not only holding onto their assets but also expanding them. The average portfolio now comprises 7.3 properties, and 39% of owners intend to remortgage within the next twelve months, leveraging still‑attractive loan terms before rates climb further. Simultaneously, 62% of landlords with lower‑rated Energy Performance Certificates are budgeting for upgrades, a proactive response to upcoming EPC mandates that could otherwise erode asset values. These strategic moves indicate a shift toward longer‑term, structured investment approaches rather than short‑term speculation.

Tenant dynamics, however, show signs of moderation. Void periods affect 43% of landlords and rental arrears touch 30% of portfolios, suggesting a more balanced market after years of tight supply. Yet confidence remains high, with 61% planning rent hikes averaging 5.7% in the coming year. For investors, the message is clear: the PRS continues to offer solid returns, but success will hinge on effective portfolio management, regulatory compliance, and the ability to navigate evolving tenant demand.