Aldermore-backed research says 42% of landlords are considering reducing the number of properties they own even though rental yields have improved, with 47% reporting higher yields over the past year and average gains of 7.2%.
The new detail is the scale of the disconnect. Tenant demand remains firm and returns are improving, but many landlords still say market conditions, tax pressure and regulation are stopping them from expanding. That turns a positive yield story into a warning about future rental supply.
For investors, this matters now because stronger income is no longer enough on its own to support growth decisions. If landlords keep using better yields to repair balance sheets rather than buy more stock, the market could stay tight even where demand remains healthy.
Higher rental yields are not translating into expansion
According to Aldermore’s Buy to Let 2026 research, 45% of landlords said current conditions were preventing them from growing their portfolios, while 18% said their rental yields had risen by 10% or more over the past year.
The pressure points cited were familiar: higher taxes, regulatory change and the wider cost burden of staying in the market. That leaves landlords in the unusual position of seeing better headline returns while still feeling less willing to commit fresh capital.
Jon Cooper, director of mortgages at Aldermore, said there was a clear disconnect in the private rented sector, with strong tenant demand and improved yields offset by regulation, tax changes and rising costs that were making many landlords hesitate before investing further.
This follows Residential Landlord’s recent coverage of rising landlord income and longer tenancies, which showed many operators are still profitable, and earlier reporting on landlords shifting toward higher-yield strategies. The latest Aldermore findings suggest improved returns are being used defensively as often as they are being used to fund expansion. The source research is summarised in Aldermore’s Buy to Let 2026 report coverage.
Landlords may bank the gains instead of buying more homes
That is the real signal for the sector. Better yields do not automatically mean confidence is back. In many cases they simply give landlords more breathing room to absorb tax changes, refinance debt or decide which properties still justify the compliance burden.
There is also a forward warning here for ministers. If landlords are already pulling back while yields are rising, policy makers should not assume stronger rents will keep supply stable. The market can produce better short-term returns and weaker long-term investment appetite at the same time.
For landlords weighing their next move, the figures suggest the choice is becoming more selective. Expanding through vanilla stock may look less attractive than focusing on specialist assets, refinancing better-performing properties or reducing exposure where future compliance costs appear harder to justify.
Opinion
Rising yields are often treated as proof that landlords are thriving. This report says something more awkward: many are earning more, but feeling less convinced about staying on a growth path. If Westminster wants supply to hold up, it cannot keep reading stronger rents as a sign that everything is fine.
