Yields in the private rental sector right now are “sitting pretty when compared to recent history” according to a survey by specialist lender Aldermore.
But despite this positivity, the Renters Rights Act is causing storm clouds to gather for some landlords, especially those with smaller portfolios, with their expectations for future lettings business dropping.
Jon Cooper, director of mortgages at Aldermore, comments: “Five out of every six landlords (84%) report their lettings activity being profitable.
“Unencumbered landlords are, unsurprisingly, likelier to report a profit than those who borrow (90% vs. 77%), and larger portfolio landlords are also more likely to report higher levels of profit.
“The average achieved yield is 6.5%, up slightly since last quarter. Encouragingly, this is the joint second highest quarterly yield within the last five years.”
He says the more professional and sophisticated landlords are navigating the changing market with greater confidence, whereas part-time landlords with smaller portfolios can struggle to adapt.
The share of landlords reporting strong tenant demand continues to decline.
While 58% still classify demand as strong in Q1 2026, this is down from 61% in Q4 2025, and down from 73% compared with Q1 last year.
Since Q1 2024, when 83% considered tenant demand as strong, that figure has fallen every single quarter in a row. Increasingly, more landlords are reporting demand as average, with a smaller increase reporting demand as weak.
Landlords’ expectations for their overall lettings business have fallen to their lowest level since Q2 2023, nearly three years ago.
Some 27% of landlords felt positive in Q1 2026, whereas throughout the prior two years, the percentage of landlords feeling positive hovered in the mid-30s.
On the Renters Rights Act, only 8% of landlords think the new legislation with positively impact their portfolios.
Some 16% expect no impact, with 70% expecting an overall negative effect and 5% unsure.
Nine in 10 landlords are also concerned about potential backlogs in the court system for evicting tenants.
