Despite increasing regulatory challenges and rising costs, professional landlords continue to find opportunities within the private rented sector (PRS). Allison Thompson, National Lettings Managing Director at Leaders, highlights that landlords who approach their portfolios as professional businesses and adapt to market changes can still achieve strong returns.

Resilience in a changing market

Contrary to widespread reports of landlords exiting the market due to tougher rules and higher expenses, the reality on the ground suggests a more resilient sector. Ms Thompson emphasises that success in buy-to-let depends largely on treating property investment as a business rather than a casual sideline. Landlords who stay informed about evolving market demands or work with qualified agents are better positioned to benefit from current conditions.

Demand outstrips supply

One of the key factors supporting landlord opportunities is the ongoing pressure on available housing stock. The PRS has struggled to keep pace with population growth, resulting in demand consistently exceeding supply across various property types, including rooms, family homes, and longer-term lets. Official data shows the proportion of homes in the PRS peaked at 20.3% in 2016/17 but declined to 18.8% by 2023, while the total number of properties has remained largely unchanged.

Meanwhile, the UK population has increased by nearly 2.5 million during this period, many of whom require rented accommodation. The shortage of social housing has intensified this demand, with approximately 1.3 million households on waiting lists in England and 139,000 in Wales. This gap means private landlords continue to play a vital role in providing housing, with around one-third of renting households receiving Universal Credit that includes housing support.

Rising rents and improved yields

Rents in the private sector have been rising at rates well above historic averages. According to Ms Thompson, average UK private rents have increased annually by more than 5% for the past three years, with an overall average growth of 7.4% (ONS data). Although rental growth has slowed somewhat in 2023, the 12 months to August still saw rents rise by 5.7% across the UK, including 5.8% in England and 7.8% in Wales.

Zoopla’s latest rental market report further illustrates this trend, showing a 36% increase in rents since 2020, compared to approximately 20% growth in average house prices. This divergence has led to improved rental yields and income returns for many landlords, making property investment more financially attractive despite regulatory pressures.

Capital growth and mortgage rates

In addition to rental income, capital growth remains an important factor for landlords. While average house prices have been relatively flat over the past three years—rising only 1.5% according to Land Registry data—previous years’ increases help offset this slowdown. Ms Thompson advises landlords to carefully research investment locations to maximise the potential for capital appreciation, as not all properties will perform equally.

Mortgage rates, which have been a concern for many landlords, are now easing. Ms Thompson notes that landlords purchasing properties in the near future who can make the numbers work with current rates may benefit from refinancing at lower rates later, reducing monthly repayments and improving cash flow.

Implications for UK landlords

The current market dynamics suggest that professional landlords who actively manage their portfolios and respond to market trends can still find success. The ongoing shortage of rented homes, rising rents, and stabilising mortgage rates combine to create a viable environment for buy-to-let investment. However, landlords must remain vigilant regarding location choices and tenant selection to maintain profitability and minimise void periods.

Looking ahead

As the private rented sector continues to evolve, landlords and agents should focus on strategic portfolio management and professional advice to navigate regulatory changes and market fluctuations. The importance of understanding inflation’s impact on rental income and capital growth remains paramount for protecting investment value.

Trusted Landlord Association update: TLA is launching a new Trusted Partners Hub in Q1 2026, featuring verified and approved service providers selected to support landlords, tenants, and property management businesses. Legal, trades, insurance, financial, mortgage, tenant screening, and other service providers are invited to register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/.