Rental yields across England and Wales have increased steadily over the past year, reaching an average of 8.1% in the first quarter of 2026. This rise reflects strong tenant demand and robust income returns for landlords, despite recent market volatility.

Rental yields rise across all regions

Data from Fleet Mortgages reveals that rental yields have grown by 0.7% year-on-year and 0.4% compared to the previous quarter. The North East continues to lead the way with the highest yield at 9.8%, marking a 0.6% increase over the last year and a 0.2% rise since the fourth quarter of 2025.

Six regions now report yields exceeding 8%, including Yorkshire and Humberside, the West Midlands, the North West, Wales, and the East Midlands. This broad-based increase highlights a positive trend for landlords across much of England and Wales.

Landlord yields remain strong despite market shifts

Steve Cox, Chief Commercial Officer at Fleet Mortgages, commented: “This latest rental barometer shows a very positive picture for much of Q1, with rental yields rising across every region in England and Wales on an annual basis, and only one region showing any sort of quarterly dip.”

He added, “That reflects the strength of tenant demand and the ability of landlords to generate solid income returns, with average yields now sitting above 8% nationally.” However, Cox cautioned that much of this data reflects the first two months of the quarter when market conditions were more stable and pricing was easing. “The market we are operating in today looks very different and continues to be extremely volatile for obvious reasons,” he noted.

Greater London sees a decline in yields

While most regions experienced yield growth, Greater London was the only area to record a quarterly decline. The South West and South East regions also saw slight increases in rental yields during the first quarter.

Landlord costs remained mostly stable throughout the quarter, but March brought volatility to buy-to-let mortgage rates, impacting the market. Fleet Mortgages also reported that landlord investment activity accounted for 33% of mortgage applications in Q1, down from 37% in the previous quarter. The lender expects current conditions to affect purchase activity more than remortgages or product transfers.

Growth in limited company borrowing and larger portfolios

Loan sizes increased to an average of £210,000, with limited company borrowing representing 78% of all applications. Additionally, 63% of applications came from landlords owning at least four properties, while those holding 15 or more properties accounted for 30% of the total during the quarter.

Mr Cox emphasised the sector’s resilience: “The underlying fundamentals of the UK private rental sector remain incredibly strong. We are continuing to see landlords looking to grow their portfolios, larger portfolio operators increasing their presence, and a sustained shift towards limited company borrowing.”

What this means for landlords

The steady rise in rental yields across most regions presents a favourable environment for landlords seeking reliable income streams. However, the volatility in mortgage rates and the decline in Greater London yields suggest that landlords should remain vigilant and consider the timing of their investment decisions carefully.

The increasing prevalence of limited company borrowing and growth in larger portfolios indicate a maturing market where professional landlords are expanding their holdings. This trend may influence competition and rental market dynamics going forward.

Source: Based on reporting from Property118

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