"For brokers, understanding these local market dynamics has never been more important. The most effective advice goes beyond simply comparing rates and products."
- Grant Hendry, director of sales at Foundation
Regional differences are playing an increasingly important role in shaping landlord strategy across the UK, according to a new report from Pegasus Insight and Foundation.
The research shows the buy-to-let sector remains resilient overall in Q2 2026, with landlords reporting an estimated portfolio value of £1.8m, gross rental income of £12,007 per property and average rental yields of 6.4%. 86% of landlords said they were making a profit from their lettings activity, while only 5% reported operating at a loss. Over the past 12 months, 22% of landlords sold a property compared to just 6% who purchased one, suggesting many are reviewing and reshaping their portfolios in response to changing market conditions.
The research highlights how performance varies significantly across different parts of the country, reinforcing the importance of regional market knowledge when assessing opportunities.
As expected, London remains a market characterised by high asset values and strong rental income. Central London landlords reported the highest average portfolio value at £3.7m and the highest rental income per property at £17,989. However, yields were lower than the national average at 5.3%.
Foundation said these figures demonstrate how landlords operating in the capital often need to balance lower yields against stronger long-term capital values and higher rental incomes.
Outside London, several regions continue to deliver stronger yields. The East of England and East Midlands both recorded average rental yields of 7.3%, the highest in the UK, followed by Yorkshire and The Humber at 6.8%, the North East at 6.6%, and both the South West and West Midlands at 6.5%.
Profitability also remains robust across much of the country. The East Midlands recorded the highest proportion of landlords making a profit at 92%, followed by the West Midlands at 90%. The East of England and South West both stood at 89%, while the South East reported profitability levels of 87%.
The data also reveals that stronger yields can be accompanied by greater operational challenges. The North East recorded one of the UK's highest average rental yields at 6.6%, but also reported the highest proportion of landlords experiencing void periods at 55%, alongside rental arrears affecting 42% of landlords.
Similarly, rental arrears were reported by 43% of landlords in Yorkshire and The Humber, 39% in the North West and 37% in the East Midlands, all significantly above the UK average of 26%.
The research also highlights ongoing portfolio restructuring among landlords. The North West recorded the highest proportion of landlords selling properties during the past year at 30%, followed by Yorkshire and The Humber at 29% and the East Midlands at 25%.
Purchasing activity was generally more subdued, although the North East stood out with 18% of landlords reporting a property purchase during the last 12 months.
Grant Hendry, director of sales at Foundation, commented: "The latest research reinforces the fact there is no such thing as a typical buy-to-let market. While headline figures show a sector that remains profitable and resilient, the regional data reveals very different opportunities and challenges depending on where landlords are investing.
"London continues to offer exceptional portfolio values and rental income, while many regional markets are producing stronger yields. At the same time, some of the highest-yielding areas are also experiencing greater levels of arrears and void periods, highlighting the need for a balanced approach to portfolio management.
"For brokers, understanding these local market dynamics has never been more important. The most effective advice goes beyond simply comparing rates and products. It involves helping landlords assess their long-term objectives, refinancing requirements, acquisition plans and portfolio strategy. By understanding the regional picture, brokers can better support clients in identifying the most appropriate opportunities and solutions, ultimately making mortgages happen."
