UK rental market profitability and stability

In the second quarter of 2026, the United Kingdom rental market showed signs of increasing profitability for landlords despite slowing house-price inflation. Average gross rental yields reached 7.02%, with houses in multiple occupation (HMOs) yielding the highest returns at 8.90%. Regional variations were notable, as London saw yields fall to 5.58% while Wales reached 8.87%.

By the same period, the proportion of landlords reporting rent arrears fell to a record low of 26%, down from 30% in the first quarter of 2026. Additionally, 86% of landlords reported making a profit from letting activities. Data from UK Finance supported this trend of stability, noting that buy-to-let mortgage arrears of more than three months have declined for nine consecutive quarters, falling to 0.52% of outstanding mortgages.

While the sector remains resilient due to healthy yields and reliable income, landlords have expressed caution regarding the broader economy and upcoming regulatory changes, specifically the Renters’ Rights Act.