The private rented sector continues to hold up well despite ongoing cost and regulatory headwinds, with most landlords remaining profitable, research from Foundation Home Loans reveals.

A study by the specialist buy-to-let lender, in partnership with Pegasus Insight, found 84% of landlords said their lettings activity was profitable in the first quarter of 2026, while average rental yields edged up to 6.5%.

Portfolio values and rental income also increased during the first three months of the year. Confidence was another area of improvement, with 63% of landlords planning to remain in the sector, up from 58% in the final three months of last year – while fewer landlords are now intending to exit.

The latest data shows a landlord community and wider private rental sector that continues to prove its resilience.”

Grant Hendry (pictured), Director of Sales at Foundation Home Loans, says: “The latest data shows a landlord community and wider private rental sector that continues to prove its resilience.

“While landlords are clearly facing a range of challenges, from rising costs to regulatory change, the fundamentals remain strong.”

Landlords are continuing to invest and restructure portfolios, too, with 39% planning to remortgage within the next year, and average portfolio sizes have increased to 7.3 properties.

Portfolios increasing

Hendry says: “Portfolio sizes are increasing, more investors are taking a structured, long-term approach, and there is clear evidence of landlords planning ahead, whether that is through refinancing activity or preparing for future EPC requirements.”

The research also shows landlords preparing for regulation, with 62% of those holding lower-rated EPC properties planning improvement works.

However, tenant demand has softened, with 43% of landlords reporting void periods and 30% rental arrears during the past 12 months. Some 61% expect to raise rents in the next year, by an average of 5.7%.

Hendry told Mortgage Solutions: “Softer tenant demand and rising voids show this is a more balanced market than in recent years, and some landlords will continue to reassess their position.

“However, the overall picture is one of a sector that is evolving rather than retreating.”