Rental yields increase across most regions despite Renters Rights Act

Rental yields increase across most regions despite Renters Rights Act

Data from Fleet Mortgages shows average rental yields in England and Wales rose to 7.9% in Q3 2026, up from 7.5% the previous year, despite the introduction of the Renters Rights Act.

Landlords across England and Wales have experienced a rise in rental yields in eight out of ten regions, according to the latest quarterly data from Fleet Mortgages. The average annual rental yield increased to 7.9% in the third quarter of 2026, compared to 7.5% in the same period in 2025. This growth has occurred despite the new regulatory environment shaped by the Renters Rights Act, which came into force earlier this year and introduced significant changes to tenancy law and landlord obligations.

The data highlights regional variations in rental returns, with Yorkshire & Humberside leading the way at 9.3%, up from 8.2% a year earlier. The East Midlands also saw a notable increase, reaching 8.4%, while the West Midlands and South East recorded yields of 8.2% and 7.2% respectively. Greater London, although still offering the lowest average yield at 6.4%, saw its rental returns improve from 5.9% in 2025. Only the North West and Wales experienced a decline in average yields year-on-year.

Detailed regional performance and landlord activity

Yorkshire & Humberside combined the highest average yield with strong purchase activity, accounting for 43% of Fleet’s mortgage applications in the region during Q3. Wales, despite a reduction in average yields from 8.1% to 7.5% and a drop in average monthly rents from £1,214 to £1,079, recorded the highest proportion of purchase business at 46%. The South West also saw an increase in purchase applications, rising from 23% to 34%, alongside a yield increase from 6.6% to 7.1%.

The North East remains one of the strongest regions for rental returns with an average yield of 9.2%. Meanwhile, the North West, despite a slight 0.2% reduction in yield, continues to deliver returns above 8%. London’s average monthly rents increased to £2,597, the highest among all regions covered, reflecting ongoing demand despite lower yields.

Fleet Mortgages’ data also reveals that experienced landlords are continuing to expand their portfolios. The average landlord applying for a Fleet mortgage owned 18 properties in Q3 2026, up from 16 in the previous quarter and 12 a year ago. Thirty percent of applications came from landlords with portfolios of 15 or more properties, and two-thirds of applications were from landlords owning four or more properties. First-time landlord applications increased slightly from 9% to 10%.

Context of the Renters Rights Act and its impact on landlords

The Renters Rights Act, introduced in 2026, brought in a range of reforms aimed at improving tenant security and rights. Key provisions include longer minimum tenancy terms, restrictions on rent increases, and enhanced grounds for possession. These changes have raised concerns among some landlords about potential impacts on profitability and portfolio management.

However, the rise in rental yields reported by Fleet Mortgages suggests that landlords have adapted to the new regulatory framework, possibly by adjusting rent levels, improving property standards, or focusing on regions with stronger returns. The data also indicates that despite regulatory changes, demand for rental properties remains robust, supporting rental income growth.

Practical implications for landlords and letting agents

For landlords, the increase in rental yields across most regions is a positive sign that investment returns remain viable under the new tenancy laws. However, regional disparities mean landlords should carefully assess local market conditions before acquiring new properties or adjusting rents. The continued growth in portfolio sizes among experienced landlords suggests confidence in the sector, but also highlights the importance of efficient management and compliance with the Renters Rights Act.

Letting agents may see increased demand for their services as landlords seek professional support to navigate the complexities of the new legislation, manage tenancy agreements, and ensure compliance. The data also points to opportunities in regions like Yorkshire & Humberside and the East Midlands, where yields and purchase activity are strong.

Remaining uncertainties and areas to monitor

While the data provides encouraging signs, uncertainties remain around the longer-term effects of the Renters Rights Act on rental markets and landlord behaviour. Changes to tenant rights could influence demand patterns, eviction processes, and rent affordability. Additionally, economic factors such as inflation, interest rates, and housing supply will continue to affect yields and investment decisions.

Landlords should stay informed about ongoing regulatory developments and market trends, and review their portfolios regularly to ensure compliance and optimise returns. Monitoring local licensing requirements, safety obligations, and tenancy procedures will be increasingly important as the sector adjusts to the evolving legal landscape.

Considerations for landlords going forward

• Review rental yields and market conditions regionally before making investment decisions.
• Ensure tenancy agreements and management practices comply with the Renters Rights Act.
• Consider professional letting agent support to manage regulatory complexity and tenant relations.
• Keep detailed records of rent reviews, repairs, inspections, and communications to demonstrate compliance.
• Monitor changes in local licensing and safety regulations that may impact property management.

Supporting landlords with compliance and portfolio management

The Landlord Association (TLA) offers membership that provides access to up-to-date compliance resources and practical guidance tailored to the changing regulatory environment shaped by the Renters Rights Act. Members can benefit from document support and detailed information on tenancy law, rent setting, and possession procedures.

TLA’s new property management and compliance platform, ORBIT, is currently available in BETA testing. It is designed to help landlords and letting agents organise properties and portfolios, manage rental documents and records, and keep evidence of compliance activity in one place. Features in testing include tools to record repairs, inspections, and communications, as well as access to TLA’s compliance resources and a property management AI assistant.

Exploring TLA membership and ORBIT BETA access can support landlords in maintaining compliance and managing their portfolios effectively amid ongoing regulatory changes.

Looking ahead, landlords should remain vigilant to further legislative updates and market shifts, adapting their strategies to sustain rental income and meet tenant expectations under the evolving Renters Rights Act framework.

Sources: Landlord Today