84% of UK Landlords Remain Profitable in 2026: What This Means for Your Mortgage

As of May 2026, a robust 84% of landlords in the UK are still turning a profit, according to data from Foundation and Pegasus Insight. This positive trend is supported by an increase in average rental yields to 6.5% and a rise in both portfolio values and rental income. However, the landscape is not without its challenges, with 42% of landlords considering selling at least one rental property within the next year.

Impact on Landlords and Tenants

Profitability and Rental Yields

With 84% of landlords reporting profitability and average rental yields increasing to 6.5%, the buy-to-let market remains a viable investment option. For instance, a landlord with a £200,000 interest-only buy-to-let mortgage, assuming a rental yield of 6.5%, would receive an annual income of £13,000. This translates to a monthly income of approximately £1,083, before expenses. This is a notable increase from the average rental yield of 6.1% reported 12 months ago.

Rent Increases and Portfolio Expansion

Approximately 61% of landlords expect to increase rents over the next 12 months, with an average projected rise of 5.7%. For a tenant paying £800 per month, this could mean an additional £45.60 per month or £547.20 annually. Meanwhile, the average portfolio size has increased to 7.3 properties, indicating a shift towards more structured, portfolio-based investment. This is a substantial growth compared to the average portfolio size of 6.8 properties reported a year ago.

Challenges Facing Landlords

Selling Properties and Remortgaging

Despite the profitability, 42% of landlords plan to sell at least one rental property in the next year, potentially due to ongoing cost and compliance pressures. Additionally, 39% of landlords with borrowing are planning to remortgage in the next year. For a landlord with a £200,000 mortgage at a 75% loan-to-value ratio, remortgaging at the current base rate of 3.75% could reduce their monthly payments from £937 to £926, a saving of £132 annually. This is a significant change compared to the base rate of 3.5% a year ago.

Void Periods and Rental Arrears

Over the last 12 months, 43% of landlords reported experiencing void periods, and 30% reported rental arrears. These factors can significantly impact a landlord’s profitability and should be factored into any investment calculations. This is a slight increase from the 40% of landlords who reported experiencing void periods and the 28% who reported rental arrears 12 months ago.

Impact on First-Time Buyers and Remortgagers

First-Time Buyers

For first-time buyers, the increase in rental yields and portfolio values could mean higher property prices. Assuming a property value of £250,000 and a 90% loan-to-value ratio, a first-time buyer would need a deposit of £25,000. With the current base rate of 3.75%, their monthly mortgage payment would be around £1,157.

Remortgagers

For those looking to remortgage, the current base rate of 3.75% could offer potential savings. For instance, a homeowner with a £200,000 mortgage at a 75% loan-to-value ratio, remortgaging at the current base rate could reduce their monthly payments from £937 to £926, a saving of £132 annually.

Frequently Asked Questions

What is the average rental yield in the UK?

As of May 2026, the average rental yield in the UK is 6.5%, up from 6.3% six months ago.

Are landlords planning to increase rents?

Yes, around 61% of landlords expect to increase rents over the next 12 months, with an average projected rise of 5.7%.

Are landlords planning to sell their properties?

Yes, 42% of landlords said they plan to sell at least one rental property in the next year, potentially due to ongoing cost and compliance pressures.

What is the average portfolio size for landlords?

The average portfolio size for landlords has increased to 7.3 properties, signalling a shift towards more structured, portfolio-based investment.