The proportion of landlords reporting rent arrears has fallen to its lowest level on record, according to research commissioned by Paragon Bank.

Some 26% of landlords said they had experienced rent arrears during the 12 months to the second quarter of 2026, down from 30% in the previous quarter.

The figure was the lowest recorded by the long-running Landlord Trends report, conducted by Pegasus Insight on behalf of Paragon.

The research also found that 86% of landlords were making a profit from their lettings activity, an increase of two percentage points from the first quarter. Separate analysis by Paragon put the average gross rental yield at 7.02% during the second quarter.

Figures from UK Finance showed that arrears of at least three months on buy-to-let mortgages had fallen for nine consecutive quarters. Such cases represented 0.52% of outstanding mortgages at the end of the second quarter, compared with 0.68% a year earlier.

Paragon said the credit performance of buy-to-let had exceeded that of the owner-occupier market in all but one of the past 26 years when measured by mortgages at least three months in arrears.

Landlord confidence remained relatively subdued overall. However, respondents expressed greater confidence in their own lettings businesses and rental yields than in the wider UK economy and future capital values.

Lisa Steele, mortgage lending director at Paragon Bank, said: “We often hear about the pressures facing landlords, whether that’s economic uncertainty, regulatory change or the wider costs associated with running and maintaining properties.

“What’s sometimes overlooked is that the overwhelming majority of tenancies work well and continue to provide reliable income for landlords.

“Record-low arrears, strong levels of profitability and healthy rental yields are all signs of a sector that continues to demonstrate resilience despite a challenging backdrop.”

She added: “It’s understandable that landlords remain cautious about factors such as the wider economy and future market conditions. However, when they look at the performance of their own portfolios, the picture is generally much more positive.

“Most tenants continue to meet their rental commitments, most landlords report operating profitable businesses and those are the factors that have the greatest influence on day-to-day confidence.”