According to the Foundation’s latest Landlord Trends survey, most landlords are still making a profit.
Foundation said the private rental sector continues to deliver stable returns and shows early signs of improving confidence for landlords, despite ongoing costs and regulatory pressures.
The data, conducted in partnership with Pegasus Insight, shows that 84% of landlords report being profitable.
At the same time, average rental yields rose to 6.5%, while both portfolio values and rental income increased quarter-on-quarter, which the Foundation said indicated continued performance of the underlying assets.
The lender also said these figures demonstrate the resilience of professional landlords.
Rent growth is also continuing, albeit at a more moderate pace. About 61% of landlords expect to increase rents over the next twelve months, with an expected average increase of 5.7%.
The Foundation says this reflects a market beginning to stabilize after a period of sharper increases, with landlords balancing cost recovery against tenant affordability.
The research also highlights ongoing activity within the sector.
Nearly four in ten landlords with loans (39%) plan to remortgage in the coming year, while the average portfolio size has increased to 7.3 properties, signaling a shift towards more structured, portfolio-based investments.
Encouragingly, landlords are also taking a proactive stance on future regulations. 62% of those with a lower rated EPC property plan to carry out works to meet future requirements, indicating they are willing to invest in a property and maintain its long-term viability.
However, the research also points to some persistent headwinds for landlords.
Tenant demand remains strong overall, but has declined from previous peaks. 43% of landlords report that there have been vacancies and 30% of rent arrears in the past twelve months.
In addition, while investment intentions have increased slightly (from 5% to 8%), a significant proportion of landlords continue to consider selling properties – 42% say they plan to sell at least one rental property in the coming year – which the Foundation believes may reflect ongoing cost and compliance pressures.
Grant Hendry, the Foundation’s director of sales, said: “The latest data shows that a landlord community and wider private rental sector continues to prove its resilience. While landlords are clearly facing a range of challenges, from rising costs to change in regulationsthe fundamentals remain strong. Profitability is holding up, returns are stable and we see the first signs that confidence is starting to return.
“What is particularly striking is the way in which landlords are adapting. Portfolio sizes are increasing, more and more investors are taking a structured, long-term approach and there is clear evidence that landlords are planning ahead, whether that is through refinancing activity or preparing for future EPC requirements.
“At the same time, we should not ignore the pressures that remain. Weaker tenant demand and rising vacancy rates show that this is a more balanced market than in recent years, and some landlords will continue to reassess their position. However, the overall picture is of a sector that is evolving rather than retreating.”