"Despite experiencing higher operating expenses and anticipating increased mortgage costs and greater regulatory complexity ahead, landlords remain firmly committed to the sector – underpinned by strong tenant demand and expectations of improving yields"
- Allison Buckley - Kensington Mortgages
A growing number of limited company landlords expect rental yields to increase over the next 12 months, even as costs and regulation continue to tighten. Data from Kensington Mortgages’ latest BTL Barometer points to a market where confidence remains firm despite ongoing pressure on margins.
The research shows that 84% of residential limited company landlords expect yields to rise, while 89% say they feel confident about the UK rental market outlook. Demand continues to underpin this sentiment, with 80% expecting tenant demand to increase and 77% predicting property prices will edge higher over the same period.
At the same time, landlords are preparing for further financial strain. Around 77% expect mortgage costs to rise, while 81% report that running costs, including repairs, insurance and maintenance, have already increased over the past year. Regulatory concerns also remain prominent, with 79% anticipating a more challenging environment ahead.
Interest rates remain the most influential factor shaping landlord confidence, cited by 31% of respondents. Regulation follows at 26%, while property prices and rental demand each register 25%. Broader economic conditions and mortgage availability both stand at 22%, with taxation close behind at 20%.
Portfolio strategy and rental yields outlook
Despite these pressures, most landlords are maintaining a steady approach to their portfolios. Just over half, 53%, plan to keep their portfolio size unchanged over the next year, while 38% intend to expand. Only 8% expect to reduce their holdings, and fewer than 1% plan to exit the buy-to-let sector entirely.
Access to finance appears relatively stable, with 74% saying they find it easy to secure buy-to-let mortgage funding. This access continues to support investment decisions, even as borrowing costs rise.
The data also highlights differences in performance between ownership structures. Among landlords with both personal and company-held assets, average gross yields stand at 5.04% for limited company portfolios, compared with 4.88% for personally held properties. More than half, 53%, now hold their entire portfolio within a limited company structure.
In terms of property types, family homes account for 40% of portfolios, followed by:
- HMOs with six bedrooms or more at 35%
- Single-tenant residential properties at 33%
- Smaller HMOs at 27%
- Holiday lets at 16%
- Student accommodation at 12%
Recent acquisitions reflect similar trends, with landlords increasing exposure to family homes, single-tenant properties and larger HMOs.
Looking ahead, diversification remains a clear priority. Almost all respondents, 95%, say they plan to invest in different property types, with corporate lets emerging as the most popular option at 37%. Larger HMOs follow at 18%, alongside family homes at 17% and single-tenant properties at 13%.
Allison Buckley, chief executive officer of Kensington Mortgages, commented, “The latest findings from our BTL Barometer underline the resilience and professionalism of today’s limited company landlords. Despite experiencing higher operating expenses and anticipating increased mortgage costs and greater regulatory complexity ahead, landlords remain firmly committed to the sector – underpinned by strong tenant demand and expectations of improving yields."
Buckley added, “What’s particularly notable is that confidence is not translating into complacency. Many landlords are actively reviewing and diversifying their portfolios, with growing interest in corporate lets and larger HMOs, demonstrating a clear focus on long-term income and adaptability."
“The limited company structure continues to play a central role in this evolution, with yields marginally higher on company-held portfolios compared to personal holdings. As the market continues to evolve, specialist lenders have an important role to play in providing the flexible, tailored financing solutions that professional landlords need to navigate change and seize opportunity.”
