The survey, carried out as part of Kensington Mortgages’ BTL Barometer, found 84% of landlords anticipate higher yields over the coming year, alongside broadly positive sentiment towards the wider rental market.
Overall, 89% of respondents said they feel confident about the outlook for the sector, while 80% expect rental demand to increase and 77% predict property prices will rise.
Despite this, landlords continue to report pressure from rising costs and regulation. More than three-quarters (77%) expect mortgage costs to increase, while 81% say their operating costs—including repairs, insurance, utilities and maintenance—have risen over the past year. In addition, 79% believe the regulatory environment will become more challenging.
Interest rates were identified as the most significant factor shaping confidence (31%), followed by regulation (26%), property prices (25%) and rental demand (25%). The broader economic outlook and mortgage availability were each cited by 22% of respondents, while taxation was highlighted by 20%.
Against this backdrop, most landlords are maintaining or expanding their portfolios. Just over half (53%) plan to keep portfolio sizes unchanged over the next 12 months, while 38% intend to grow their holdings. A smaller proportion (8%) are considering reducing exposure. The majority (74%) also reported that they currently find it easy to access buy-to-let mortgage finance.
The research also highlights portfolio composition among limited company landlords. More than half (53%) hold their entire portfolio within a limited company structure. Among those with both limited company and personal holdings, average gross rental yields were reported at 5.04% for limited company properties, compared with 4.88% for personally held assets.
In terms of asset types, family homes remain the most common (40%), followed by larger HMOs (35%), single-tenant properties (33%), and smaller HMOs (27%). Holiday lets (16%) and student accommodation (12%) are less commonly held.
Recent activity suggests continued focus on core residential stock, with landlords most frequently adding family homes (21%), single-tenant properties (20%) and larger HMOs (16%) to their portfolios in recent years.
Looking ahead, 95% of respondents said they are considering diversification into different property types. Corporate lets were the most commonly cited target (37%), followed by larger HMOs (18%), family homes (17%) and single-tenant properties (13%).