"Landlords are not stepping away from the sector in large numbers. Instead, they are becoming more selective and more strategic"
- Jon Cooper - Aldermore
Most landlords are reporting profitable portfolios and landlord rental yields are close to a five-year high, but confidence is falling as the Renters' Rights Act takes effect and smaller operators grow increasingly uncertain about the road ahead.
That is the picture emerging from fresh research commissioned by Aldermore, conducted in conjunction with Pegasus Insight.
"If you're a landlord or a broker, there are reasons to be hopeful here," said Jon Cooper, director of mortgages at Aldermore (pictured)
"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. Generally speaking, we're seeing that 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, that is down from 61% in Q4 2025 and 73% in Q1 the previous year.
The slide stretches back further still: in Q1 2024, 83% considered tenant demand strong, and the figure has fallen every single quarter since. More landlords are now reporting demand as average, with a smaller proportion describing it as weak.
Expectations for overall lettings business have dropped to their lowest level since Q2 2023. Just 27% of landlords felt positive in Q1 2026, compared with a mid-30s average throughout the prior two years.
Sentiment around the Renters' Rights Act is notably cautious. Only 8% of landlords believe the legislation will positively affect their portfolios, while 16% expect no impact. The majority, 70%, anticipate an overall negative effect, with 5% unsure. Nine in 10 are also worried about potential backlogs in the court system for evicting tenants.
Cooper acknowledges the challenges but sees the current environment as an opportunity for brokers to take on a more strategic role.
"The conditions may feel more complex than in previous years, but that is exactly when strong partnerships matter most," he said. "Brokers aren't just there to find the cheapest rate. They're trusted advisers helping landlords make sense of regulation, manage portfolios, and plan for long-term investment success."
"Landlords are not stepping away from the sector in large numbers. Instead, they are becoming more selective and more strategic. For brokers, this creates a clear opportunity to step in as a steadying influence, helping clients interpret change and make informed decisions."
