"While landlords are clearly facing a range of challenges, from rising costs to regulatory change, the fundamentals remain strong"
- Grant Hendry - Foundation
Intermediary-only specialist lender, Foundation, has published its Landlord Trends research for Q1 2026, painting a picture of a private rental sector that continues to deliver stable returns and is showing early signs of recovering confidence, despite ongoing cost and regulatory pressures.
Conducted in partnership with Pegasus Insight, the data shows 84% of landlords reporting profitable lettings activity, underlining the continued strength of the buy-to-let model even as operating costs rise. Average rental yields edged up to 6.5%, with both portfolio values and rental income increasing quarter-on-quarter.
Foundation said the figures pointed to sustained underlying asset performance and demonstrated the resilience of professional landlords, many of whom continue to adapt their strategies around long-term income and capital growth.
Confidence levels are also showing tentative signs of recovery. The NRLA's landlord confidence measure rose across all regions in Q1, while the proportion of landlords planning to remain in the sector climbed to 63%, up from 58% in Q4 2025. References to leaving the market have fallen, suggesting that while challenges remain, many landlords are adjusting rather than exiting.
Rental growth is continuing, though at a more measured pace. Around 61% of landlords expect to increase rents over the next 12 months, with an average projected rise of 5.7%. Foundation says this reflects a market beginning to stabilise after a period of sharper increases, with landlords balancing cost recovery against tenant affordability.
The research also highlights continued activity within the sector. Nearly four in 10 landlords with borrowing (39%) plan to remortgage in the next year, and the average portfolio size has grown to 7.3 properties, signalling ongoing consolidation and a shift towards more structured, portfolio-based investment.
On regulation, 62% of landlords with lower-rated EPC properties plan to carry out improvement works to meet future requirements, suggesting a willingness to invest in stock and maintain long-term viability.
The picture is not entirely positive, however. Tenant demand, while still strong overall, has softened from previous peaks, and 43% of landlords report experiencing void periods over the past 12 months, with 30% reporting rental arrears. Investment intentions have edged up slightly, from 5% to 8%, but 42% of landlords said they plan to sell at least one rental property in the next year, which Foundation attributed to ongoing cost and compliance pressures.
"The latest data shows a landlord community and wider private rental sector that continues to prove its resilience," said Grant Hendry, director of sales at Foundation.
"While landlords are clearly facing a range of challenges, from rising costs to regulatory change, the fundamentals remain strong. Profitability is holding up, yields are stable, and we're seeing early signs that confidence is beginning to return."
"What is particularly notable is the way in which landlords are adapting. Portfolio sizes are increasing, more investors are taking a structured, long-term approach, and there is clear evidence of landlords planning ahead, whether that is through refinancing activity or preparing for future EPC requirements."
"At the same time, we shouldn't ignore the pressures that remain. Softer tenant demand and rising voids show this is a more balanced market than in recent years, and some landlords will continue to reassess their position. However, the overall picture is one of a sector that is evolving rather than retreating."
"For brokers, this creates a significant opportunity. Landlords need support to navigate an increasingly complex landscape, whether that's around portfolio structuring, refinancing or funding improvements. Specialist lenders and brokers therefore have a key role to play in ensuring landlords can continue to operate successfully and take advantage of the opportunities that still exist."
