Regional variations in yield, profitability and operational risk are reshaping buy-to-let investment decisions across the UK, according to the latest Pegasus Insight Landlord Trends report, produced in conjunction with Foundation.
The research, covering Q2 2026, shows the sector remains broadly resilient. Landlords reported an estimated average portfolio value of £1.8m, gross rental income of £12,007 per property and average rental yields of 6.4%. Some 86% said they were operating at a profit, while just 5% reported a loss. Portfolio activity continues to shift, however, with 22% of landlords having sold a property in the past 12 months against only 6% who purchased one, suggesting active consolidation and reallocation of capital across the sector.
Performance across regions diverges considerably. The East of England and East Midlands both recorded average rental yields of 7.3%, the highest in the UK. Yorkshire and The Humber followed at 6.8%, with the North East at 6.6% and both the South West and West Midlands at 6.5%. In each case, comparatively lower property values are enabling investors to generate returns that outpace the national average.
London presents a contrasting picture. Central London landlords reported the highest average portfolio value at £3.7m, and the highest rental income per property at £17,989, yet yields came in below the national average at 5.3%. For landlords operating in the capital, lower yields sit alongside stronger long-term capital growth potential and higher absolute rental income, Foundation said.
Profitability levels are strong in many regions. The East Midlands recorded the highest proportion of landlords making a profit at 92%, followed by the West Midlands at 90%. The East of England and South West both reported 89%, with the South East at 87%. Foundation said these figures indicate landlords' ability to adapt to shifting economic, tax and regulatory conditions, with the majority continuing to run profitable rental businesses.
However, the highest-yielding regions also carry the greatest operational risk. The North East, despite offering average yields of 6.6%, recorded the highest proportion of landlords experiencing void periods at 55%, with rental arrears affecting 42% of landlords in the region.
Arrears rates in Yorkshire and The Humber reached 43%, while the North West reported 39% and the East Midlands 37%, all materially above the UK average of 26%. Foundation said the data highlights the importance of weighing tenant demand, arrears exposure and void rates alongside yield when evaluating a region's investment fundamentals.
Portfolio restructuring is most visible in those same markets. The North West recorded the highest proportion of landlords selling properties over the past year at 30%, followed by Yorkshire and The Humber at 29% and the East Midlands at 25%. Purchasing activity was generally subdued, though the North East stood out, with 18% of landlords reporting an acquisition in the last 12 months.
Grant Hendry, director of sales at Foundation (pictured), commented: "The latest research reinforces the fact that there is no such thing as a typical buy-to-let market. While headline figures show a sector that remains profitable and resilient, the regional data reveals very different opportunities and challenges depending on where landlords are investing."
"London continues to offer exceptional portfolio values and rental income, while many regional markets are producing stronger yields. At the same time, some of the highest-yielding areas are also experiencing greater levels of arrears and void periods, highlighting the need for a balanced approach to portfolio management."
"For brokers, understanding these local market dynamics has never been more important. The most effective advice goes beyond simply comparing rates and products. It involves helping landlords assess their long-term objectives, refinancing requirements, acquisition plans and portfolio strategy. By understanding the regional picture, brokers can better support clients in identifying the most appropriate opportunities and solutions, ultimately making mortgages happen."
