While eight in ten (84%) landlords report that their lettings business is profitable and that yields are up, consistently falling tenant demand is proving worrying.
Meanwhile, seven in ten (70%) believe that the Renters Rights Act will have a negative impact, especially for smaller landlords, according to research commissioned by Aldermore, in conjunction with Pegasus Insight.
The company surveyed more than 600 landlords between 9 March and 3 April, 2026.
Reasons to be hopeful
But it’s not all bad news, according to Jon Cooper, director of mortgages at Aldermore.
“If you’re a landlord or a broker, there are reasons to be hopeful here,” he said.
“Five out of every six landlords (84%) report their lettings activity being profitable. Unencumbered landlords are, unsurprisingly, more likely 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 said that more professional and sophisticated landlords are navigating the changing market with greater ease than part-time landlords whose smaller portfolios can make it harder for them to adapt.
Reports of strong demand fall
However, the research also showed that the number of landlords reporting strong demand continues to decline. 58% classify demand as strong in Q1 2026, but this is down from 61% in the previous quarter and from 73% the same time last year.
The number of landlords reporting strong tenant demand has fallen every quarter in a row since the first quarter of 2024, when 83% considered tenant demand as strong. Instead, more landlords are reporting demand as average, and a smaller increase are reporting weak demand.
Landlord positivity has also fallen to its lowest level since Q2, 2023. In the first quarter of 2026, 27% of landlords surveyed felt positive, yet this figure had hovered in the mid-30s for the previous two years.
The Renters’ Rights Act is also proving worrying. Only 8% of landlords think it will positively impact their portfolios, while 16% expect no impact and 5% are unsure. Nine in 10 landlords are also concerned about potential backlogs in the court system for evicting tenants.
