26% of landlords said they had seen arrears in the past 12 months, down from 30% in Q1 2026.
The proportion of landlords experiencing rent arrears dropped to a record low in the second quarter of 2026, according to research carried out for Paragon Bank.
26% of landlords said they had seen arrears in the past 12 months, down from 30% in the first quarter and the lowest level recorded by the Landlord Trends report from Pegasus Insight.
86% of landlords reported making a profit from lettings, up by two percentage points on the previous quarter.
Paragon Bank’s latest figures showed average gross rental yields at 7.02% in the second quarter of the year.
Lending data from UK Finance showed buy-to-let (BTL) mortgage arrears of more than three months have fallen for nine consecutive quarters.
These arrears represented 0.52% of outstanding BTL mortgages at the end of the second quarter, down from 0.68% a year earlier.
The credit profile of BTL has outperformed the owner-occupier sector in all but one of the past 26 years.
Landlord sentiment remained cautious about the wider economy, but confidence was higher in their own lettings businesses and rental yields.
Lisa Steele (pictured), mortgage lending director at Paragon Bank, said: “We often hear about the pressures facing landlords, whether that’s economic uncertainty, regulatory change or the wider costs associated with running and maintaining properties.
“What’s sometimes overlooked is that the overwhelming majority of tenancies work well and continue to provide reliable income for landlords.
“Record-low arrears, strong levels of profitability and healthy rental yields are all signs of a sector that continues to demonstrate resilience despite a challenging backdrop.”
Steele added: “It’s understandable that landlords remain cautious about factors such as the wider economy and future market conditions.
“However, when they look at the performance of their own portfolios, the picture is generally much more positive.
“Most tenants continue to meet their rental commitments, most landlords report operating profitable businesses and those are the factors that have the greatest influence on day-to-day confidence.”