Foundation Home Loans has reported signs of improving landlord confidence in the first quarter of 2026, despite continuing cost and regulatory pressures in the private rented sector.
The intermediary-only specialist lender said its latest Landlord Trends research, conducted with Pegasus Insight, found that 84% of landlords said their lettings activity was profitable.
The research also showed average rental yields edging up to 6.5%, while portfolio values and rental income increased quarter-on-quarter.
Foundation said the figures pointed to resilient underlying asset performance, with many professional landlords continuing to focus on long-term income and capital growth.
Confidence also appeared to improve. The NRLA’s landlord confidence measure rose across all regions in the first quarter, while the proportion of landlords planning to remain in the sector increased to 63%, from 58% in the fourth quarter of 2025.
References to leaving the market have also fallen, suggesting more landlords are adjusting to market conditions rather than exiting.
Rental growth is expected to continue, although 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%.
The research also found that 39% of landlords with borrowing are planning to remortgage in the next year, while the average portfolio size has increased to 7.3 properties.
Foundation said this signalled continued consolidation and a move towards more structured, portfolio-based investment.
Landlords are also preparing for future regulation, with 62% of those holding lower-rated EPC properties planning works to meet future requirements.
However, the research highlighted continued pressures. Tenant demand, while still strong overall, has softened from previous peaks, while 43% of landlords reported void periods and 30% reported rental arrears over the last 12 months.
Investment intentions have edged up from 5% to 8%, but 42% of landlords said they plan to sell at least one rental property in the next year.
Grant Hendry, director of sales at Foundation, said: “The latest data shows a landlord community and wider private rental sector that continues to prove its resilience. 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.”
