Rental yields rise despite Renters Rights Act impact

Rental yields rise despite Renters Rights Act impact

Average rental yields across England and Wales increased to 7.9% in the third quarter of 2026, showing resilience in the buy-to-let market despite the introduction of the Renters Rights Act.

New data from Fleet Mortgages’ Buy-to-Let Rental Barometer reveals that average annual rental yields grew by 0.4% year-on-year, rising from 7.5% in Q3 2025 to 7.9% in Q3 2026. This rise comes amid ongoing regulatory changes affecting landlords, including the Renters Rights Act, which has introduced new tenancy protections and obligations.

The report highlights that while some regions experienced a decline in yields, the overall trend remains positive, indicating that landlords continue to find buy-to-let investments financially viable despite tighter regulations and mortgage market volatility.

Fleet Mortgages Rental Barometer details

The Fleet Mortgages Quarterly Rental Barometer provides a detailed regional analysis of rental yields, lending patterns, and landlord profiles. In Q3 2026, Yorkshire & Humberside led the regions with the highest average yield of 9.3%, followed closely by the North East at 9.2%. The North West and Wales were the only regions to see a year-on-year decline in yields. Greater London remained the lowest-yielding region at 6.4%, though it commanded the highest average monthly rent of £2,597, which increased nearly 10% since the previous quarter.

Quarter-on-quarter, yields declined in East Anglia, the North West, and Wales, while the North East remained steady. The report also noted a decrease in average rental cover at origination, from 144% to 132%, reflecting increased affordability pressures due to rising mortgage rates and funding costs.

Mortgage pricing remained volatile during the quarter, with average two-year fixed rates rising slightly from 4.78% to 4.89%, and five-year fixed rates increasing from 5.44% to 5.57%. Fleet Mortgages’ own average two-year rates increased modestly, while its five-year rates fell slightly.

Landlord profile and market activity

The Barometer highlights a trend towards professionalisation among landlords. The average number of investment properties owned by Fleet borrowers rose from 16 in Q2 2026 to 18 in Q3, compared to 12 properties a year earlier. Landlords with portfolios of 15 or more properties accounted for 30% of applications, up from 26% in the previous quarter and 23% a year ago. Those owning four or more properties made up 66% of applications, while first-time landlord applications edged up slightly to 10%.

Purchase activity eased slightly, comprising 34% of Fleet’s business in Q3 compared with 36% in Q2, but remained above the 33% recorded in Q1. Limited company borrowing dominated, representing 71% of applications, though this was down from 78% in the previous quarter.

Steve Cox, Chief Commercial Officer at Fleet Mortgages, commented that despite uncertainty from geopolitical and economic factors, professional landlords continue to expand portfolios where opportunities arise. He noted that rental fundamentals remain supportive, with strong regional variations presenting opportunities for landlords willing to consider local market conditions carefully.

Context of the Renters Rights Act and market resilience

The Renters Rights Act, introduced earlier in 2026, brought significant changes to tenancy law, enhancing tenant protections and imposing new obligations on landlords. These include extended notice periods, restrictions on rent increases, and strengthened property standards requirements. Such regulatory shifts have raised concerns among landlords about potential impacts on rental income and property management complexity.

However, the latest rental yield data suggests that the buy-to-let sector is adapting. The increase in average yields and the growing size of professional landlord portfolios indicate that many investors remain confident in the long-term viability of rental properties, despite the Act’s constraints and the broader economic challenges.

The regional variation in yields also reflects differing local market dynamics, with areas like Yorkshire & Humberside and the North East offering higher returns, potentially attracting investors seeking better yield opportunities outside London and the South East.

Practical implications for landlords and agents

For small portfolio landlords and letting agents, the data underscores the importance of understanding regional market conditions and adjusting investment strategies accordingly. Higher yields in certain regions may offset the increased costs and regulatory burdens introduced by the Renters Rights Act.

Landlords should also be mindful of the tightening mortgage market and affordability pressures, as reflected in the reduced rental cover ratios. Careful financial planning and consideration of borrowing structures, including limited company ownership, remain crucial.

The trend towards professionalisation means that landlords managing multiple properties must ensure robust compliance with the new legal requirements, maintain up-to-date records, and manage tenant relationships proactively to mitigate risks associated with the Act.

Areas of ongoing uncertainty and what to monitor

While the data shows resilience, uncertainties remain. The full impact of the Renters Rights Act on tenant behaviour, rent levels, and possession proceedings is still evolving. Changes in mortgage pricing and economic conditions could also affect landlord profitability and investment decisions.

Landlords should watch for further government guidance and potential amendments to regulations, as well as shifts in local housing market trends. Monitoring tenant demand and affordability will be critical, especially in regions where rental values are lower or declining.

Further analysis will be needed to assess how the Act influences eviction rates, rent arrears, and property maintenance standards over time.

What landlords should consider now

• Review regional rental yields and market dynamics to identify the most viable investment locations.
• Assess mortgage arrangements and rental cover to ensure financial sustainability under current interest rates and regulatory costs.
• Ensure full compliance with the Renters Rights Act, including tenancy agreements, notices, and property standards.
• Maintain detailed records of tenant communications, repairs, and inspections to support compliance and dispute resolution.
• Consider the benefits of limited company ownership structures, which remain popular among professional landlords.
• Stay informed about evolving regulations and market conditions through trusted industry sources.

Keeping your rental properties compliant

TLA membership offers valuable support for landlords and letting agents adapting to the Renters Rights Act and other regulatory changes. Members can access practical compliance resources, document templates, and guidance to help meet new legal obligations effectively.

Additionally, TLA’s ORBIT platform, currently in BETA testing, is being developed to assist landlords in organising property portfolios, managing rental documentation, and recording key actions such as inspections and repairs. This can be particularly useful for landlords managing multiple properties who need to keep track of compliance activities and tenancy records in one place.

Exploring TLA membership and ORBIT BETA access can provide landlords with tools and information to navigate the complexities of the current rental market and regulatory environment.

Looking ahead, landlords should continue monitoring rental yield trends and regulatory updates to make informed decisions about portfolio growth and management.

Sources: Landlord Today