Four in five limited company landlords remain confident about the UK rental market, but fewer plan to grow their portfolios as access to buy-to-let finance becomes more difficult, according to Kensington Mortgages’ latest BTL Barometer.
The survey found that 80% of landlords feel confident about the outlook for the UK rental market over the next 12 months. However, this is down from 89% in Kensington’s previous BTL Barometer, published in April.
Landlords have also become less optimistic about rental yields, tenant demand and property prices. Just over seven in ten (71%) expect rental yields to increase over the next year, compared with 84% in the previous survey. The proportion expecting rental demand to rise has fallen from 80% to 65%, while 69% anticipate property prices will increase, down from 77%.
Expectations around some portfolio costs have eased. Fewer than six in ten landlords (59%) expect mortgage costs to rise over the next 12 months, compared with 77% previously. Meanwhile, 73% said their running costs, including repairs, insurance, utilities and maintenance, had increased over the past year. This was down from 81% in the spring.
Financing and regulation remain key challenges
Despite the easing expectations around costs, access to finance remains a concern. Just 42% of landlords now describe accessing BTL mortgage finance as easy, compared with 74% earlier this year.
Regulation also continues to feature prominently in landlords’ plans. Three-quarters (75%) expect the regulatory environment for the UK property market to become more challenging over the next 12 months, slightly below the 79% recorded in the previous survey.
Almost all respondents (99%) said potential reforms, including proposals to replace council tax and stamp duty, would influence their future property investment plans to some extent.
The factors influencing landlord confidence have also changed. Rental demand is now the most commonly cited influence, selected by 27% of respondents. In the previous survey, interest rates ranked first, with 31% identifying them as a factor.
Average gross rental yields stand at 4.83%, compared with 4.98% in the spring. More than three-quarters of landlords (78%) also believe rents in their area have become more affordable for tenants over the past 12 months.
Landlords focus on consolidating and diversifying portfolios
The more cautious outlook is reflected in landlords’ investment plans. Just 11% intend to expand their portfolios over the next 12 months, down from 38% in the previous survey. Instead, 77% plan to maintain the size of their portfolios, compared with 53% previously.
However, interest in diversification remains high. Almost all landlords (98%) are considering different property types, up from 95%. Family residential properties are now the most popular option, attracting interest from 26% of respondents. This marks a change from the spring, when corporate lets led the way at 37%.
Kensington’s own lending figures also point to demand for family housing, with houses accounting for 71% of its limited company BTL lending so far in 2026.
The proportion of landlords holding their entire portfolios through limited companies has also increased. Almost seven in ten (68%) now use this structure, up from 53%, and respondents own an average of 12 properties. More than half (58%) have company portfolios in which half or fewer of their properties are financed through mortgages.
Family residential properties remain the most commonly held type of investment, accounting for 35% of landlords’ holdings. HMOs with six or more bedrooms make up 34%, followed by single-tenant residential properties at 32% and smaller HMOs at 27%.
Holiday and student lets remain less common, but ownership has increased. The proportion of landlords holding holiday lets rose from 16% to 26%, while the share with student lets increased from 12% to 23%.
Landlords continue to invest in existing portfolios
Although fewer landlords plan to expand, they continue to invest in their existing properties. Almost all respondents (99%) have made improvements over the past 12 months. The most common projects included upgrading fixtures and fittings (47%), making energy efficiency improvements (43%) and carrying out extensions (43%).
Energy efficiency requirements are also influencing investment decisions, with 96% of landlords saying they are a factor in their plans.
Kensington’s lending data shows a growing share of borrowing going towards properties with stronger energy performance ratings. EPC C-rated properties accounted for 40.8% of the value of its lending in 2026 so far, an increase of 2.3 percentage points year on year. The share accounted for by EPC A-rated properties rose by 1.3 percentage points to 1.9%.
Landlords are drawing on several sources of funding to pay for improvements. Cash savings are the most common source, used by 37% of respondents, followed by third-party cash injections at 29%.
Around a quarter have also used mortgage finance, either by remortgaging another property in their portfolio (26%), borrowing against the property being upgraded (26%) or remortgaging their own home (25%).
“Landlord confidence remains resilient, but our latest BTL Barometer points to a market that is becoming more considered in its outlook.” said Allison Buckley, chief executive officer of Kensington Mortgages.
“While the majority continue to expect rental yields, demand, and property prices to increase, expectations have moderated since the spring. Encouragingly, fewer landlords expect mortgage costs to rise and the proportion reporting higher running costs has also fallen, although access to finance and regulation remain important considerations.
“We are also seeing a clear shift towards consolidation rather than rapid expansion, with more than three-quarters intending to maintain the size of their portfolios over the next year.
She added, "However, landlords remain active within their existing portfolios, with almost all considering diversification and 99% having made improvements over the past 12 months. With energy efficiency requirements also influencing investment decisions for almost all landlords, there is a clear focus on adapting existing properties for the future.
“As landlords balance investment in their existing properties with changing regulatory, taxation, and financing considerations, specialist lenders and brokers have an important role to play. Flexible financing solutions and specialist expertise will remain key to helping professional landlords navigate these challenges and make informed decisions about their portfolios.”
