Landlords are carrying average borrowing of £714,000 and paying around £25,000 a year in mortgage interest before tax, repairs and compliance costs are counted, according to new analysis from Pepper Money and Pegasus Insight.
The figures matter because they land days before the Renters’ Rights Act takes effect on 1 May. The headline from the research is not that most landlords are loss-making – they are not. Pepper said 85 percent still report a profit – but the spare room in many portfolios is getting smaller. Higher borrowing costs, thicker compliance files and slower rental growth mean landlords have less margin for mistakes than they did even a year ago.
Borrowing pressure is rising across portfolios
Pegasus said the average landlord now owns 6.6 properties, with each worth about £253,000, while 42 percent have at least one interest-only mortgage. Average gross rental income per property was put at £11,363 a year, or roughly £947 a month, with portfolio income averaging £75,000.
That looks comfortable at first glance. But once £25,000 of annual mortgage interest is stripped out, the room left to absorb repairs, voids, EPC upgrades, agent fees and tax is much tighter. For landlords with older stock or refinancing due this year, the practical issue is cashflow rather than headline asset values.
This follows Landlord Knowledge’s report on portfolio borrowing levels, which showed landlords already carrying an average 6.5 mortgages each. The latest Pepper and Pegasus figures suggest that pressure has not eased as the sector heads into the biggest tenancy law change in a generation.
RRA timing adds a second squeeze
Pepper linked the cost picture to the Renters’ Rights Act, arguing that tighter regulation is making financial planning more important, especially for smaller portfolio landlords. That is a useful warning. Borrowing costs on their own are manageable for many operators. Borrowing costs arriving alongside new possession rules, repair expectations and compliance deadlines are harder to shrug off.
There is also a warning for landlords still relying on rent rises to restore margins. Pepper said 65 percent are increasing rents, but Pegasus described that as the lowest reading since the second quarter of 2023. In other words, costs are rising at the same time pricing power is becoming less reliable.
For landlords watching the market, that sits alongside earlier Landlord Knowledge coverage of Pepper’s warnings on rental supply. The sector is not collapsing, but it is becoming less forgiving. The landlords most likely to struggle are those with weak documentation, expensive debt and properties that need capital spending soon.
Readers can view Pepper Money’s site here.
What this means for landlords
- If you’re refinancing in 2026: stress-test deals against higher interest costs and slower rent growth, not best-case assumptions.
- If your properties need EPC or repair work: price that spending now, because compliance costs are landing when cashflow is already tighter.
- Watch for: portfolios that look profitable on paper but depend on one rent rise or one refinance to stay comfortable.
- Bottom line: the gap between a viable portfolio and an awkward one is narrowing.
Editor’s view
Landlords do not need panic from this set of numbers. They do need realism. A portfolio can still work well in 2026, but sloppy borrowing assumptions and deferred maintenance look much riskier than they did when money was cheaper.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 28 April 2026
Sources: Pepper Money, Pegasus Insight
Related reading: Portfolio landlords now hold 6.5 mortgages on average
