Landlord Eye #05 - Landlord sentiment, welfare reform and tenant risk

Introduction

The latest edition of Landlord Eye presents findings from the NRLA’s first quarterly consultation of 2026, capturing landlord confidence, sentiment and views on some of the key issues shaping the private rented sector.

Conducted online between 8 and 22 March 2026, the survey gathered views from NRLA members who declared themselves active landlords with portfolios focused in England or Wales.

Download the report to find out more about:

• The latest results from the NRLA Landlord Confidence Index.
• How landlord sentiment has shifted since the end of 2025.
• The proportion of landlords now renting to Universal Credit tenants.
• Why LHA remains a minority market for many landlords.
• How landlords may change tenant referencing under the Renters’ Rights Act.
• Landlord experiences of anti-social behaviour and possession notices.
• A focused look at landlord confidence and policy concerns in Wales

Landlord Confidence Index

Landlord confidence rose in every region in the first quarter of 2026, with the overall confidence score for England and Wales rising to 30.3 - up five points on the previous quarter and the largest increase since quarter 3 2023. The recovery was particularly strong in the East Midlands and the North East.

However, the improvement comes from a very low base. At 30.3, the index remains the second-lowest score recorded since the measure began in 2019. A majority of landlords - 61% - still said they were less or much less confident than in the previous quarter.

The findings suggest that while some of the immediate concerns seen at the end of 2025 have eased, landlords have reason to remain cautious about the year ahead. Making Tax Digital, implementation of the Renters’ Rights Act and possible rent controls in Wales will be on many landlords' minds in 2026.

Universal Credit

In quarter 1 2026, 46% of landlords said they rent to at least one tenant in receipt of Universal Credit, up reaching its highest level on record. This follows a period of stabilisation between 2022 and 2025.

There are signs of improvement on arrears. The proportion of landlords reporting significant arrears among UC-claiming tenants fell to 31%, the second-lowest level since tracking began.

However, arrears remain closely linked to the operation of the UC system. Among landlords who experienced arrears, 76% said they occurred after a tenant began a new Universal Credit claim. Landlords also highlighted delays in direct payment claims, with many reporting waits of eight weeks or more.

The findings underline that while more landlords are operating in this part of the market, payment certainty and system responsiveness remain central concerns.

Local Housing Allowance

Local Housing Allowance remains a minority market for landlords. In quarter 1, 11% of landlords said they currently let at least one property at LHA rates. Nearly six in ten said local LHA rates were not relevant to the rent they charge, while a further 30% were unsure.

For landlords who do not let at LHA rates, the main barriers are financial. Open-text responses pointed to weak yields, rising costs and the widening gap between LHA and market rents. Among landlords reporting a shortfall between LHA and the rent they charge, 36% said the gap had emerged or widened in the last two or three years.

Retention within the LHA-rate market also appears fragile. If an LHA tenant vacated, 42% of landlords said they would re-let at a higher rent, while 21% said they would sell the property. Just 11% said they would re-let at the LHA rate.

The report calls for LHA rates to be restored to at least the 30th percentile from 2027/28, alongside a commitment to maintain this level for the remainder of the UK Parliamentary term.

Tenant screening

The report also examines how landlords reference prospective tenants, and how this may change under the Renters’ Rights Act. More than half of landlords said referencing is handled by a letting agent, while 36% said they self-reference all prospective tenants. Only a small proportion said they carry out right-to-rent checks only.

Many landlords expect to become more cautious once the Renters’ Rights Act comes into force. More than half said they would be less willing to let to higher-risk tenants, while 42% said they would carry out more thorough referencing. Around four in ten said they would be more likely to require a guarantor.

Landlords who already let to Universal Credit tenants were more likely than other landlords to say they would tighten checks further, including by requiring a guarantor or increasing affordability requirements.

Anti-social behaviour and possession notices

Just under a quarter of landlords said they had experienced anti-social behaviour in the last two years.

Among those who had, landlords most commonly said they kept their own record log, issued written warnings or asked neighbours to provide statements. However, comments highlighted concerns about the difficulty of gathering evidence, the time involved in resolving cases through the courts, and the wider impact on neighbours while problems continue.

When asked about responses to anti-social behaviour, 41% said they had spoken to the tenant displaying ASB, while 38% had served a Section 21 notice. Smaller proportions had sought a mutual surrender, contacted the police or served a Section 8 notice.

The report also finds that one in four landlords had served a possession notice in the last 12 months. Rent arrears were the most common reason, followed by landlords selling due to the Renters’ Rights Act, selling for other reasons, and anti-social behaviour.

Wales

Confidence among Welsh landlords rose to 34.4, up 2.9 points on the previous quarter. However, sentiment fell to 38, reflecting continued perhaps reflecting concern about possible reforms as a result of the then pending election. 

Almost half of landlords - 47% - operating in Wales said they were either planning to reduce their portfolio or aiming to exit the market altogether. When asked about possible changes such as the removal of the current no-fault possession route or the introduction of rent regulation, many said they would consider selling properties, increasing rents to reflect perceived risk, or strengthening affordability and referencing checks.