Rent arrears among landlords have fallen to a record low, while more than eight in 10 landlords continue to run profitable lettings businesses, according to the latest Landlord Trends report from Pegasus Insight for Paragon Bank.
Some 26% of landlords reported experiencing rent arrears during the previous 12 months in the second quarter of 2026.
This represents a four-percentage-point decline from 30% in the first quarter of the year and marks the lowest level recorded by the long-running Landlord Trends report, produced by Pegasus Insight on behalf of Paragon Bank.
At the same time, 86% of landlords said their lettings activity was profitable, up two percentage points from the previous quarter, while Paragon Bank’s latest rental yields analysis found average gross rental yields reached 7.02% in the second quarter.
Wider lending data reiterates similar messaging. Figures published by UK Finance showed there were 8,390 buy-to-let (BTL) mortgages in arrears of 2.5% or more of the outstanding balance in the second quarter of 2026, 6% fewer than in the previous quarter. BTL arrears accounted for just 0.44% of outstanding mortgages during the period.
The credit performance of the BTL sector has also consistently outperformed the wider owner-occupier market, with mortgages more than three months in arrears remaining lower in the BTL sector than in the owner-occupied market in all but one of the past 26 years.
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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.”
She 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.”