Landlord Confidence Falls Despite Rising Profits
Only 23% of landlords feel confident about the future of their rental businesses, compared with 63% in 2011. However, new research from Pegasus Insight reveals that more landlords are making a profit today than they were 15 years ago.
The findings highlight a growing gap between landlords’ financial performance and how they feel about the sector. While rental profits remain steady, rent arrears have fallen and average yields have changed very little, many landlords believe running a rental business has become increasingly difficult.
The research also shows that landlords are getting older, managing smaller property portfolios and becoming less reliant on mortgages. Despite these changes, confidence in the private rental sector has continued to decline.
Pegasus Insight presented its 15-year comparison on 3 November 2026 to buy-to-let lenders involved in its Landlord Trends research. Here is a closer look at the findings and what they reveal about the current state of the UK rental market.
Key findings from the research
- Just 23% of landlords feel confident about their rental businesses, down from 63% in 2011.
- Despite the fall in confidence, 85% report making a profit, compared with 82% in 2011.
- The proportion of landlords experiencing rent arrears has dropped from 50% to 28%.
- Average rental yields have edged down from 6.7% to 6.4%.
- The average landlord is now 63 years old, compared with 56 in 2011.
- Average portfolio sizes have fallen from 11.8 properties to eight.
- Around 43% of landlords now own their entire portfolio without a mortgage, up from 25%.
- A growing number are using limited companies, with 24% holding at least one property through a company, compared with 17% in the third quarter of 2020.
How have landlords changed over the past 15 years?
Pegasus Insight compared its latest landlord research with figures collected in 2011, looking at areas including financial performance, confidence, investment plans and borrowing.
The company was founded in February 2023 by directors Bethan Cooke and Mark Long, who had previously spent around 20 years researching the landlord market while working at BVC-BDRC.
The comparison highlights some significant changes over the past 15 years.
| Measure | 2011 | Latest figures | Change |
|---|---|---|---|
| Confident about their rental business | 63% | 23% | -40 percentage points |
| Positive about being a landlord | 77% | 25% | -52 percentage points |
| Believe landlords are respected | 7% | 2% | -5 percentage points |
| Say being a landlord has become harder | 66% | 89% | +23 percentage points |
| Say letting provides them with a living | 62% | 48% | -14 percentage points |
| Report making a profit | 82% | 85% | +3 percentage points |
| Experienced rent arrears | 50% | 28% | -22 percentage points |
| Average rental yield | 6.7% | 6.4% | -0.3 percentage points |
| Average landlord age | 56 | 63 | +7 years |
| Average portfolio size | 11.8 properties | 8 properties | -3.8 properties |
| Average number of buy-to-let mortgages | 8.8 | 5.9 | -2.9 mortgages |
| Own their entire portfolio outright | 25% | 43% | +18 percentage points |
The figures are based on Pegasus Insight’s 15-year Landlord Trends comparison, published on 3 November 2026. The press release does not provide its sample size, fieldwork dates or a breakdown by UK nation, so the findings should be treated as indicators from its research rather than official statistics.
Why are profitable landlords becoming less confident?
At first glance, the figures suggest that landlords are doing reasonably well financially. More are reporting a profit than in 2011, fewer are dealing with rent arrears and average rental yields have only fallen slightly.
However, financial performance does not necessarily reflect how landlords feel about running their businesses.
Pegasus Insight believes the decline in confidence is linked to the growing number of tax and regulatory changes affecting the sector. Director Bethan Cooke highlighted the 2015 restriction on mortgage interest tax relief, known as Section 24, as an important turning point.
She explained that landlords can still operate profitable businesses while deciding that further investment is no longer worthwhile because of the uncertainty and additional work involved.
The figures on earning a living also help explain the difference. Only 48% of landlords now believe letting properties provides them with a living, compared with 62% in 2011.
In other words, making a profit does not always mean the returns are enough to justify the time, financial commitment and risks involved in managing rental properties.
Tax changes could add further pressure. The 28 October 2026 Budget set out new property income tax rates of 24%, 44% and 49% from April 2027 for individual landlords in England, Wales and Northern Ireland. These changes are due to be included in the Finance Bill 2026-27.
For landlords, this could mean another reduction in the amount of rental income they retain after tax.
The average landlord is getting older and managing fewer properties
The research also shows that the profile of the typical landlord has changed considerably.
The average age has increased from 56 in 2011 to 63 today. At the same time, the average property portfolio has reduced from 11.8 homes to eight.
Landlords are also carrying less mortgage debt. The average number of buy-to-let mortgages has fallen from 8.8 to 5.9, while the proportion who own their entire portfolio outright has increased from 25% to 43%.
Company ownership is another area showing growth. Pegasus found that 24% of landlords now hold at least one rental property through a limited company, up from 17% in the third quarter of 2020.
Among landlords using companies, the average number of properties held within the company has increased from 7.6 to 12.7. These properties now account for 75% of their portfolios, compared with 57% six years ago.
How does this compare with the Government’s landlord survey?
The Government’s English Private Landlord Survey 2024 provides another view of the sector. It covered more than 9,000 landlords in England, with research carried out between April and May 2024.
However, its findings are not directly comparable with Pegasus Insight’s research because the surveys measure different groups of landlords.
| Measure | Pegasus Insight (latest) | English Private Landlord Survey 2024 |
|---|---|---|
| Age | Average of 63 | Median of 59; 64% are aged 55 or older |
| Portfolio size | Average of eight properties | 45% own one property, 38% own two to four and 17% own five or more |
| Company ownership | 24% own at least one property through a limited company | 6% let through a company and 1% use both personal and company ownership |
| Borrowing | 43% own their entire portfolio outright | 41% have no borrowing against any of their properties |
The difference between the two surveys suggests that Pegasus Insight’s research includes more established landlords with larger portfolios. Its average of eight properties is considerably higher than the portfolio sizes reported in the Government survey.
The Government’s figures also show that landlords with five or more properties account for 49% of all tenancies in England. This means the confidence and investment decisions of larger landlords could have an important effect on the availability of rental homes.
Despite their differences, both surveys point towards an ageing landlord population and a significant number of landlords who own properties outright.
Owning properties without mortgages offers some protection against rising interest rates. However, these landlords are still exposed to changes in taxation and the increasing costs of meeting rental regulations.
How does your rental business compare with the average?
The average rental yield reported by Pegasus Insight is 6.4%. Landlords can use this figure as a benchmark when reviewing the performance of their own properties.
However, rental yield alone does not show how much money a property generates after expenses or whether the rent is enough to cover mortgage payments.
When reviewing your portfolio, it is useful to consider:
- Gross rental yield: Annual rental income divided by the property’s current value.
- Net rental yield: Rental income after running costs, before mortgage interest and tax.
- Annual profit: The amount remaining after running costs and mortgage interest, before tax.
- Interest cover ratio (ICR): A measure used by buy-to-let lenders to check whether rental income can cover mortgage interest at a specified stress rate.
For example, consider a property worth £250,000 that generates £16,000 in annual rent. Its gross rental yield is 6.4%, matching the average reported by Pegasus Insight.
If annual running costs are £3,500, the property generates £12,500 before mortgage interest and tax. This gives it a net yield of 5%.
The mortgage balance and interest rate will then determine how much profit the landlord retains before tax.
Comparing mortgage-backed and mortgage-free properties
The following examples use the same property value, rental income and running costs to show how different mortgage arrangements affect the figures.
| Scenario | Mortgage | Annual interest | Profit before tax | ICR at 5.5% stress |
|---|---|---|---|---|
| A: 60% loan at 5% | £150,000 | £7,500 | £5,000 | 194% |
| B: 75% loan at 5% | £187,500 | £9,375 | £3,125 | 155% |
| C: 75% loan refinanced at 6% | £187,500 | £11,250 | £1,250 | 142% at 6% |
| D: Property owned outright | £0 | £0 | £12,500 | Not applicable |
These examples show how quickly profits can fall when a landlord has a larger mortgage.
In Scenario B, the landlord makes £3,125 before tax. However, if the mortgage rate increases from 5% to 6%, as shown in Scenario C, annual profit falls to £1,250.
The interest cover ratio also drops to 142%, which would fall below a 145% requirement for a higher-rate taxpayer under the example used.
Scenario D highlights the benefit of owning a property outright. Without mortgage interest to pay, the landlord retains £12,500 before tax.
However, there is an opportunity cost to consider. The property represents £250,000 of invested capital, generating a 5% net yield. The landlord must also account for income tax on the rental profits.
These calculations are illustrative and assume interest-only mortgages. Individual landlords should also remember that mortgage interest is not deducted directly from rental profits for income tax purposes. Instead, eligible individual landlords receive a basic-rate tax credit. This can affect the final amount retained, particularly for higher-rate taxpayers.
Lender affordability requirements also differ. Some lenders use interest cover ratios of 125% for basic-rate taxpayers and 145% for higher- or additional-rate taxpayers, although the exact requirements depend on the lender and mortgage product.
Steps landlords can take to review their rental business
Falling confidence does not automatically mean landlords should sell their properties or stop investing. Before making a decision, it is worth reviewing the actual performance of each property and considering what the figures mean for the future.
Here are some practical steps:
- Review your income and expenses. Look at the rent you actually received over the past 12 months, rather than the advertised rental amount. Include repairs, insurance, management fees, compliance costs and mortgage interest.
- Compare each property’s yield. Use the 6.4% average reported by Pegasus Insight as a reference point. Properties generating much lower returns may need closer attention.
- Check upcoming mortgage renewals. Record when each fixed-rate deal ends and calculate how higher interest rates could affect your monthly profit.
- Review your tax position. Speak to an accountant about the property income tax changes expected from April 2027 and whether a limited company structure may be suitable for future purchases.
- Monitor rent arrears and void periods. Review your tenant referencing process and consider whether rent guarantee insurance or other measures could help reduce the impact of missed payments.
- Decide on your longer-term plans. Consider whether you want to expand your portfolio, maintain your current properties or gradually sell some of them. Your age, mortgage terms and lenders’ borrowing criteria may also influence these decisions.
A regular review can help landlords identify properties that are performing well and those that may need a change in strategy.
Frequently asked questions
Are landlords still making a profit in 2026?
Yes. Pegasus Insight found that 85% of landlords reported making a profit, up from 82% in 2011. However, only 48% believe letting properties provides them with a living.
What is the average rental yield in the UK?
The average rental yield reported in Pegasus Insight’s latest research is 6.4%. Landlords should also consider their net yield after running costs to understand how much their properties actually generate.
How old is the average UK landlord?
According to Pegasus Insight, the average landlord is now 63, compared with 56 in 2011. The Government’s English Private Landlord Survey 2024 reported a median age of 59, with 64% of landlords aged 55 or older.
How many landlords use limited companies?
Pegasus Insight found that 24% of landlords own at least one property through a limited company, up from 17% in the third quarter of 2020. The Government’s survey found that 6% of landlords in England let properties through a company, while 1% used both personal and company ownership.
What interest cover ratio do buy-to-let lenders require?
Requirements vary between lenders and mortgage products. As an example, TSB uses a 125% interest cover ratio for basic-rate taxpayers and 145% for higher- or additional-rate taxpayers. Landlords should check the specific affordability requirements before applying for or refinancing a mortgage.
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