Foundation said the private rental sector that continues to deliver stable returns and shows early signs of improving confidence for landlords, despite ongoing cost and regulatory pressures.

The data, conducted in partnership with Pegasus Insight, shows 84% of landlords reporting being profitable.

At the same time, average rental yields edged up to 6.5%, while both portfolio values and rental income increased quarter-on-quarter, which Foundation said pointed to sustained underlying asset performance.

The lender also said these figures demonstrated the resilience of professional landlords.

Rental growth is also continuing, albeit at a more measured pace. Around 61% of landlords expect to increase rents over the next 12 months, with an average projected rise of 5.7%.

Foundation said this reflects a market that is beginning to stabilise 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 10 landlords with borrowing (39%) are planning to remortgage in the next year, while the average portfolio size has increased to 7.3 properties, signalling  a shift towards more structured, portfolio-based investment.

Encouragingly, landlords are also taking a proactive approach to future regulation. 62% of those with lower-rated EPC properties plan to carry out works to meet future requirements, suggesting a willingness to invest in property stock and maintain long-term viability.

However, the research also points to a number of continued headwinds for landlords.

Tenant demand, while still strong overall, has softened compared to previous peaks, and 43% of landlords report experiencing void periods, and 30% reporting rental arrears, over the last 12 months.

In addition, while investment intentions have edged up slightly (from 5% to 8%), a significant proportion of landlords continue to consider selling property – 42% said they plan to sell at least one rental property in the next year – which Foundation said may reflect ongoing cost and compliance pressures.

Foundation director of sales Grant Hendry said: “The latest data shows a landlord community and wider private rental sector that continues to prove its resilience. While landlords are clearly facing a range of challenges, from rising costs to regulatory change, the fundamentals remain strong. Profitability is holding up, yields are stable, and we’re seeing early signs that confidence is beginning to return.

“What is particularly notable is the way in which landlords are adapting. Portfolio sizes are increasing, more investors are taking a structured, long-term approach, and there is clear evidence of landlords planning ahead, whether that is through refinancing activity or preparing for future EPC requirements.

“At the same time, we shouldn’t ignore the pressures that remain. Softer tenant demand and rising voids show this is a more balanced market than in recent years, and some landlords will continue to reassess their position. However, the overall picture is one of a sector that is evolving rather than retreating.”