The vast majority of landlords continue to report profitable portfolios and improving rental yields, despite growing concern around the impact of the Renters’ Rights Act, according to research commissioned by Aldermore in partnership with Pegasus Insight.
The research found that 84% of landlords said their lettings activity remains profitable, with average achieved yields rising to 6.5% during Q1 2026 – the joint second-highest quarterly yield recorded over the past five years.
Profitability levels were strongest among larger portfolio landlords and those without borrowing exposure, with 90% of unencumbered landlords reporting profits compared with 77% of landlords with finance arrangements in place.
However, despite continued profitability, landlord sentiment has weakened significantly amid regulatory changes and growing uncertainty around the operation of the private rented sector following the implementation of the Renters’ Rights Act.
The research found that just 27% of landlords felt positive about their overall lettings business in Q1 2026, marking the lowest level of confidence since Q2 2023 and down from the mid-30% range recorded across much of the previous two years.
The findings also showed that landlord confidence in tenant demand has continued to soften.
While 58% of landlords still described tenant demand as strong during Q1 2026, this has fallen consistently from 83% in Q1 2024.
Concerns around the Renters’ Rights Act were particularly pronounced, with 70% of landlords expecting the legislation to negatively impact their portfolios.
Only 8% believed the reforms would have a positive effect, while 90% expressed concern about potential delays within the court system relating to tenant evictions.
Jon Cooper, director of mortgages at Aldermore, said: “If you’re a landlord or a broker, there are reasons to be hopeful here.
“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.”
Cooper added: “The conditions may feel more complex than in previous years, but that is exactly when strong partnerships matter most.
“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.”