Confidence among limited company landlords remains strong despite signs of a more cautious outlook for the UK rental market, according to Kensington Mortgages’ latest BTL Barometer.

Four out of five (80%) landlords feel confident about the outlook for the UK rental market over the next 12 months.

While this remains a significant majority, it is still a fall from nearly nine in ten (89%) recorded in Kensington’s previous BTL Barometer in April this year.

Expectations for rental yields, tenant demand, and property prices have also fallen.

Seven out of 10 (71%) landlords expect rental yields to increase over the next 12 months, down from 84% previously.

Almost two-thirds (65%) expect rental demand to rise, compared with 80% earlier this year. Meanwhile, nearly seven in ten (69%) anticipate property prices increasing, down from more than three-quarters (77%).

However, landlords appear more optimistic about some of the cost pressures facing their portfolios.

Less than six in ten (59%) expect mortgage costs to increase over the next year, a significant decrease from 77% previously.

In addition, nearly three-quarters (73%) say their running costs – including repairs, insurance, utilities, and maintenance – have increased over the past year, down from 81% previously.

Landlords also feel it is harder to access buy-to-let mortgage finance.

Under half (42%) now describing this as easy, compared with nearly three-quarters (74%) earlier this year.

Regulation also remains a concern. Three-quarters (75%) expect the UK property market’s regulatory environment to become more challenging over the next 12 months.

Although slightly lower than the 79% recorded previously, the findings suggest regulatory change remains firmly on landlords’ agendas.

Almost all (99%) say potential reforms, such as proposals to replace council tax and stamp duty, would influence their future property investment plans to at least some extent.

The factors shaping landlord confidence have also shifted. Rental demand is now the most commonly cited factor influencing confidence in the market, selected by 27% of landlords, while interest rates were the most frequently cited factor previously, at 31%.

Average gross rental yields remain relatively strong at 4.83%, compared with 4.98% earlier this year. At the same time, more than three-quarters (78%) of landlords believe rents in their area have become more affordable for tenants compared with 12 months ago.

The more measured outlook is reflected in landlords’ investment plans. Just over one in ten (11%) intend to expand their property portfolio over the next 12 months, a notable drop from nearly four in ten (38%) previously. Instead, more than three-quarters (77%) plan to maintain the size of their portfolio, up significantly from just over half (53%) previously.

Nevertheless, appetite for diversification remains strong, with almost all (98%) considering different property types, up from 95%.

Family residential properties now attract the greatest interest (26%), marking a shift from earlier this year, when corporate lets were the leading choice (37%).

There is also a growing preference for the limited company structure. Almost seven in ten (68%) landlords now hold their entire portfolio through limited companies, up from 53%, with respondents owning 12 properties on average. More than half (58%) have company portfolios where half or less of their properties are financed with a mortgage.

Family residential properties remain the most commonly held property type (35%), followed by HMOs with six bedrooms or more (34%), single-tenant residential properties (32%), and smaller HMOs (27%). While holiday and student lets remain less common, ownership has increased notably, from 16% to 26% and 12% to 23% respectively.

Almost all landlords (99%) have made improvements over the past 12 months, including upgrading fixtures and fittings (47%), making energy efficiency improvements (43%) and undertaking extensions (43%). Energy efficiency is also influencing wider investment decisions, with 96% saying requirements are a factor in their plans.

Kensington’s lending data also points to a shift in the EPC profile of properties financed.

EPC C-rated properties accounted for 40.8% of lending value in 2026 to date, up 2.3 percentage points year-on-year, while the share accounted for by EPC A-rated properties increased by 1.3 percentage points to 1.9%.

Kensington Mortgages chief executive Allison Buckley said: “Landlord confidence remains resilient, but our latest BTL Barometer points to a market that is becoming more considered in its outlook.

“While the majority continue to expect rental yields, demand, and property prices to increase, expectations have moderated since the spring. Encouragingly, fewer landlords expect mortgage costs to rise and the proportion reporting higher running costs has also fallen, although access to finance and regulation remain important considerations.”