A large majority of residential limited company landlords expect rental yields to rise over the next 12 months, according to new research from Kensington Mortgages, part of Barclays.
The survey, carried out as part of Kensington Mortgages’ BTL Barometer, found 84% of landlords anticipate higher yields over the coming year, alongside broadly positive sentiment towards the wider rental market.
Overall, 89% of respondents said they feel confident about the outlook for the sector, while 80% expect rental demand to increase and 77% predict property prices will rise.
Despite this, landlords continue to report pressure from rising costs and regulation. More than three-quarters (77%) expect mortgage costs to increase, while 81% say their operating costs—including repairs, insurance, utilities and maintenance—have risen over the past year. In addition, 79% believe the regulatory environment will become more challenging.
Interest rates were identified as the most significant factor shaping confidence (31%), followed by regulation (26%), property prices (25%) and rental demand (25%). The broader economic outlook and mortgage availability were each cited by 22% of respondents, while taxation was highlighted by 20%.
Against this backdrop, most landlords are maintaining or expanding their portfolios. Just over half (53%) plan to keep portfolio sizes unchanged over the next 12 months, while 38% intend to grow their holdings. A smaller proportion (8%) are considering reducing exposure. The majority (74%) also reported that they currently find it easy to access buy-to-let mortgage finance.
The research also highlights portfolio composition among limited company landlords. More than half (53%) hold their entire portfolio within a limited company structure. Among those with both limited company and personal holdings, average gross rental yields were reported at 5.04% for limited company properties, compared with 4.88% for personally held assets.
In terms of asset types, family homes remain the most common (40%), followed by larger HMOs (35%), single-tenant properties (33%), and smaller HMOs (27%). Holiday lets (16%) and student accommodation (12%) are less commonly held.
Recent activity suggests continued focus on core residential stock, with landlords most frequently adding family homes (21%), single-tenant properties (20%) and larger HMOs (16%) to their portfolios in recent years.
Looking ahead, 95% of respondents said they are considering diversification into different property types. Corporate lets were the most commonly cited target (37%), followed by larger HMOs (18%), family homes (17%) and single-tenant properties (13%).
Allison Buckley, chief executive officer of Kensington Mortgages, commented: “The latest findings from our BTL Barometer underline the resilience and professionalism of today’s limited company landlords. Despite experiencing higher operating expenses and anticipating increased mortgage costs and greater regulatory complexity ahead, landlords remain firmly committed to the sector – underpinned by strong tenant demand and expectations of improving yields.
“What’s particularly notable is that confidence is not translating into complacency. Many landlords are actively reviewing and diversifying their portfolios, with growing interest in corporate lets and larger HMOs, demonstrating a clear focus on long-term income and adaptability.
“The limited company structure continues to play a central role in this evolution, with yields marginally higher on company-held portfolios compared to personal holdings. As the market continues to evolve, specialist lenders have an important role to play in providing the flexible, tailored financing solutions that professional landlords need to navigate change and seize opportunity.”
