The proportion of landlords suffering rent arrears has fallen to a record low, with the overwhelming majority of landlords in profit.

This is according to research by Paragon Bank.

The second quarter of 2026 saw 26% of landlords report experiencing rent arrears during the past 12 months. 

This was down by four percentage points from 30% in the first quarter of the year to mark the lowest level recorded by the bank’s long-running Landlord Trends report.

Alongside record-low arrears, 86% of landlords reported making a profit from their lettings activity, up by two percentage points on the previous quarter.

On top of that, Paragon’s latest rental yields analysis found average gross rental yields reached 7.02% during the second quarter of the year.

The bank insists that the credit profile of buy-to-let has consistently outperformed the wider owner-occupier sector, with three months plus arrears being lower in buy-to-let than owner-occupied in all but one of the past 26 years. 

And it adds that these indicators point towards a sector where rental income remains reliable and the majority of landlords continue to operate profitable businesses despite ongoing economic, political and regulatory pressures.

The findings are reflected in landlord sentiment. 

While confidence remains relatively subdued overall, landlords reported greater confidence in the performance of their own lettings businesses and rental yields than in factors outside their control, such as the wider UK economy and future capital values.

Lisa Steele, Mortgage Lending Director at Paragon Bank, comments: “We often hear about the pressures facing landlords, whether that’s economic uncertainty, regulatory change or the wider costs associated with running and maintaining properties. What’s sometimes overlooked is that the overwhelming majority of tenancies work well and continue to provide reliable income for landlords.

“Record-low arrears, strong levels of profitability and healthy rental yields are all signs of a sector that continues to demonstrate resilience despite a challenging backdrop.”

She adds: “It’s understandable that landlords remain cautious about factors such as the wider economy and future market conditions. However, when they look at the performance of their own portfolios, the picture is generally much more positive.

“Most tenants continue to meet their rental commitments, most landlords report operating profitable businesses and those are the factors that have the greatest influence on day-to-day confidence.”