Proportion of landlords experiencing rent arrears fall to record low

19 August 2026

The proportion of landlords experiencing rent arrears has fallen to a record low, with the overwhelming majority of landlords continuing to report profitable lettings businesses, research conducted on behalf of Paragon Bank has revealed.

Underlining the resilience of the rental sector, the second quarter of 2026 saw 26% of landlords report experiencing rent arrears during the past 12 months. This was down by four percentage points from 30% in the first quarter of the year to mark the lowest level recorded by the long-running Landlord Trends report, conducted by Pegasus Insight on behalf of Paragon Bank.

Alongside record-low arrears, 86% of landlords reported making a profit from their lettings activity, up by two percentage points on the previous quarter, while Paragon's latest rental yields analysis found average gross rental yields reached 7.02% during the second quarter of the year.

Industry lending data acts as further evidence of the sector’s resilience, with figures recently published by UK Finance showing that three months plus arrears on buy-to-let mortgages have fallen for nine consecutive quarters, representing 0.52% of outstanding mortgages at the end of the second quarter, down from 0.68% a year previously.

The credit profile of buy-to-let has consistently outperformed the wider owner-occupier sector, with three months plus arrears being lower in buy-to-let than owner-occupied in all but one of the past 26 years.

These indicators point towards a sector where rental income remains reliable and the majority of landlords continue to operate profitable businesses despite ongoing economic, political and regulatory pressures.

The findings are reflected in landlord sentiment. While confidence remains relatively subdued overall, landlords reported greater confidence in the performance of their own lettings businesses and rental yields than in factors outside their control, such as the wider UK economy and future capital values.

Commenting on the findings, 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.”