Most landlords say their portfolios are still profitable and average yields have edged up again, but confidence in the private rented sector has weakened as the Renters’ Rights Act beds in.
New Q1 2026 research commissioned by Aldermore and carried out by Pegasus Insight found 84 percent of landlords said their lettings activity was profitable, while average achieved yields rose to 6.5 percent from 6.4 percent in the previous quarter.
The same survey also pointed to a more cautious mood. Just 27 percent of landlords said they felt positive about their overall lettings business in Q1, the lowest reading since Q2 2023, while 70 percent said the Renters’ Rights Act would have a negative effect on their portfolios and nine in 10 said they were worried about court backlogs when seeking possession for rent arrears.
Profits hold up even as confidence slips
The headline numbers suggest most landlords are still managing to protect returns despite higher compliance costs, tax pressure and softer tenant demand than a year ago. Aldermore said five out of every six landlords remained in profit, with unencumbered investors more likely to report a surplus than those with borrowing, and larger portfolio landlords also reporting stronger results.
Jon Cooper, director of mortgages at Aldermore, said there were still reasons for landlords and brokers to take encouragement from the figures. He said 84 percent of landlords were profitable, unencumbered landlords were more likely to report profit than borrowers, and the 6.5 percent average achieved yield was joint second highest over the past five years.
That said, the pressure points in the data are harder to ignore. The share of landlords describing tenant demand as strong slipped to 58 percent in Q1, down from 61 percent in Q4 and from 73 percent a year earlier. More respondents now describe demand as average, which suggests that while rental homes remain scarce, tenants are becoming more price-sensitive and selective.
For landlords, that matters because healthy yields on paper do not automatically translate into easy trading conditions. A landlord who needs to refinance, complete works, or absorb a longer void period still faces a tougher market than the headline profit rate alone suggests.
RRA concerns still dominate landlord sentiment
The survey also shows how strongly reform is shaping landlord behaviour. Only 8 percent of landlords said the new legislation would have a positive impact on their portfolio, while 16 percent expected no impact. By contrast, 70 percent expected a negative effect and 5 percent were unsure.
Aldermore’s findings fit with wider signs that landlords are trying to adjust rather than rushing for the exit. This follows Landlord Knowledge’s February report on landlord concerns over the Renters’ Rights Act, which found 84 percent expected the reforms to harm the sector. The latest figures suggest those concerns have not eased now that the law is in force, even though profitability has held up better than many expected.
There is also a clear split between larger and smaller operators. Aldermore said more professional landlords were handling market change with greater confidence, while smaller part-time landlords were finding it harder to adapt. That matters for supply because modest portfolio owners often make up a large share of local rental stock, especially outside London.
Landlords looking for a fuller picture of recent returns can also compare the latest survey with earlier Landlord Knowledge coverage of falling yields at the start of the year, when average achieved yields were lower and one in seven landlords said they were making a loss.
For property investors, the practical takeaway is straightforward: income performance is still resilient, but confidence is now being shaped less by tenant demand alone and more by how easily landlords think they will be able to enforce their rights, manage arrears and carry extra compliance costs.
Landlords can read Aldermore’s latest findings in the lender’s newsroom coverage of its landlord research.
What this means for landlords
- If you’re refinancing this year: do not assume a profitable portfolio will offset tighter lender scrutiny on stress tests, arrears risk and compliance.
- Watch for: any evidence that court delays on rent arrears cases start to feed through into insurance pricing, void assumptions and lender criteria.
- Bottom line: yields are still holding up, but smaller landlords may find the new legal and operational burden harder to absorb than larger portfolio investors.
Editor’s view
These figures are a useful reminder that landlord sentiment and landlord performance are not the same thing. Returns have not collapsed, but confidence has. That gap matters because confidence is what drives reinvestment, upgrades and future supply.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 8 May 2026
Sources: Aldermore, Pegasus Insight
Related reading: Landlords fear Renters’ Rights Act as 84% predict sector harm
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