The proportion of landlords who have experienced rent arrears at any point in the past 12 months fell four percentage points to 26 per cent in the second quarter of 2026, the lowest figure ever recorded by the Landlord Trends report, conducted by Pegasus Insight on behalf of Paragon Bank.
Two other measures moved in the same direction. The share of landlords making a profit on their lettings rose two percentage points on the previous quarter to 86 per cent, while average gross rental yields reached 7.02 per cent.
For investors, that combination matters more than any single headline. Rent collected on time is what turns a yield on paper into cash in a bank account.
The mortgage data says the same thing
The pattern is not confined to survey responses. Three months plus arrears on buy-to-let mortgages have now fallen for nine consecutive quarters and represented 0.52 per cent of outstanding buy-to-let mortgages at the end of the second quarter, down from 0.68 per cent a year previously, according to UK Finance.
The longer record is more striking. Three months plus arrears have been lower in buy-to-let than in the owner-occupied market in all but one of the past 26 years, a credit performance gap that rarely features in coverage of the sector.
What Paragon argues is being overlooked
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.”
She added: “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.”
The caveat is that resilience is not the same as ease. An 86 per cent profitability rate still leaves roughly one landlord in seven not making money, and the operational reality that buy-to-let offers no guarantees and little that is genuinely passive has not changed because arrears have fallen.
Cautious on the economy, confident on the portfolio
The survey also captured a split in landlord sentiment. Respondents remain wary about the wider economy and future market conditions, yet report far greater confidence in how their own portfolios are performing.
“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,” Steele said.
That gap between macro anxiety and micro performance is familiar to anyone who has run a portfolio through the past three years. Investors tend to trade on what their own rent roll is doing, not on the sentiment index.
What this means for investors
The immediate read is that tenant affordability, at least among tenants already in place, is holding up better than the noise around the private rented sector suggests. Arrears risk, one of the harder variables to price into a buy-to-let purchase, is currently at its most benign since these figures have been collected.
Two forces are worth watching. Supply is the first: forecasts of shrinking rental supply into 2026 point to continued competition for good tenants, which tends to support rent collection as much as headline rents. Landlords continuing to exit the sector reinforce the same dynamic.
The second is regulation. The Renters’ Rights Act 2025 reshapes how possession and arrears are handled, and a low arrears environment is the moment to tighten referencing, reserves and rent recovery processes rather than to relax them.
Underwrite a purchase on the assumption that today’s arrears figure is permanent and the next turn in the cycle will be an unwelcome surprise. Price in a worse number, and record lows become upside rather than the base case.
