Annual rental yields in England and Wales have increased, but six out of ten regions experienced a quarterly dip, according to Fleet Mortgages’ latest Buy-to-Let Rental Barometer. This mixed performance highlights the varying dynamics in the rental market, which are important for landlords and investors to consider.
What Are the Current Rental Yields?
In the second quarter of 2026, average rental yields for England and Wales increased by 0.3% year-on-year, reaching 7.8%. However, there was a decline from 8.1% in the first quarter of 2026. The North East leads the regional yield rankings with an annual increase of 0.5%, but it also saw a quarterly dip of 0.6%, settling at 9.2%. The North West follows closely with an average yield of 8.8%, while Yorkshire and Humberside, Wales, and both the East and West Midlands also maintain yields above 8%.
Which Regions Are Most Affected?
Despite the annual growth in rental yields, the quarterly declines indicate a shifting market. The North East remains the top performer, but its recent drop reflects broader trends affecting landlords across various regions. The North West’s rise to second place is noteworthy, as it suggests a potential shift in investor interest. Regions like Yorkshire and Humberside, Wales, and the Midlands are also significant, as they continue to attract landlords seeking stable yields.
What Does This Mean for Landlords and Investors?
For landlords, the mixed performance of rental yields signals a need for strategic planning. The increase in annual yields may encourage investment, but the quarterly declines suggest caution is warranted. With Fleet Mortgages reporting a rise in purchase activity from 33% in Q1 to 36% in Q2, many landlords are still actively seeking opportunities. However, first-time landlord applications decreased slightly from 11% to 9%, indicating that new entrants may be more hesitant in the current environment.
Additionally, the professionalisation of the landlord community is evident, with Fleet borrowers averaging 16 properties each, up from 10 last year. This trend highlights the importance of understanding market conditions and adapting strategies accordingly. Limited company borrowing remains dominant, comprising 78% of all applications, which may suggest that landlords are increasingly seeking tax efficiencies.
Frequently Asked Questions
How do rental yields impact my investment decisions?
Rental yields are a key indicator of the profitability of property investments. Higher yields can signal better returns, but fluctuations can also indicate changing market conditions that may affect future profitability.
What should I watch for in the rental market?
Keep an eye on regional yield trends, changes in landlord application demographics, and economic indicators such as interest rates and inflation, as these factors can significantly impact the rental market.