Landlords Remain Profitable Despite Concerns Over Renters’ Rights Act, 2026

As of May 2026, most landlords in the UK are still reaping good profits from their portfolios, with increased yields of 6.5%, up slightly from the previous quarter. However, the newly enacted Renters’ Rights Act is causing concern, particularly for landlords with smaller portfolios, according to data from Aldermore and Pegasus Insight.

Impact of Renters’ Rights Act on Landlords

Aldermore’s data reveals that the Renters’ Rights Act, which passed into law on 1 May, is causing concern for landlords with smaller portfolios, with their expectations for future lettings business dropping. Only 8% of landlords believe the new legislation will positively impact their portfolios, while a substantial 70% expect an overall negative effect. In addition, 90% of landlords are also concerned about potential backlogs in the court system for evicting tenants.

Scenario: Small Portfolio Landlord

Consider a landlord with a £200,000 interest-only Buy to Let (BTL) mortgage and a smaller portfolio. With the current base rate of 3.75%, their monthly cost is approximately £625. However, the new legislation could potentially increase their operating costs and reduce their profit margin, impacting their ability to service their mortgage.

Scenario: Large Portfolio Landlord

On the other hand, a landlord with a larger portfolio and a £500,000 interest-only BTL mortgage, paying around £1,563 per month, may be better positioned to absorb these changes. Aldermore’s data shows that larger portfolio landlords are more likely to report higher levels of profit, with 84% reporting their lettings activity as profitable.

Market Trends and Context

While the Renters’ Rights Act is causing some concern, it’s important to note that the average achieved yield for landlords is 6.5%, up slightly since last quarter. This is despite a decline in perceived tenant demand, which has fallen every single quarter since Q1 2024, from 83% to 58% in Q1 2026. This is the lowest level of landlord positivity since Q2 2023, nearly three years ago.

Comparison with Previous Years

Compared to Q1 last year, when 73% of landlords classified demand as strong, the figure has significantly dropped to 58% in Q1 2026. This decline in demand, coupled with the introduction of the Renters’ Rights Act, is contributing to the drop in landlords’ expectations for their lettings business.

Current Base Rate and Its Impact

The current Bank of England base rate is 3.75%, which influences the interest rates on BTL mortgages. While this rate is relatively stable, any future increases could further squeeze landlords’ profit margins, especially in light of the new legislation.

Frequently Asked Questions

What is the Renters’ Rights Act?

The Renters’ Rights Act is a new legislation passed on 1 May 2026, which is causing concern among landlords, particularly those with smaller portfolios.

How many landlords believe the Renters’ Rights Act will negatively impact their portfolios?

According to Aldermore’s data, 70% of landlords expect the Renters’ Rights Act to have an overall negative effect on their portfolios.

What is the current average yield for landlords?

The average yield for landlords as of Q1 2026 is 6.5%, which is a slight increase from the previous quarter.

What is the current perception of tenant demand?

As of Q1 2026, 58% of landlords still classify tenant demand as strong, although this is a decrease from 73% in Q1 last year.