Rental yields have increased in every region across England and Wales over the past year, pushing the national average to 8.1% during the first quarter of 2026. This marks a steady improvement in returns for landlords, reflecting ongoing strength in the private rental sector.
New figures from Fleet Mortgages show that yields rose by 0.7% compared to the same period last year, while also seeing a smaller quarterly increase of 0.4%. The data highlights a broadly positive trend, with most areas experiencing consistent growth.
Strong Performance Across Regions
The North East once again recorded the highest rental yields, reaching 9.8%. This represents a year-on-year increase of 0.6%, alongside a 0.2% rise compared to the previous quarter. The region continues to stand out as a strong performer for landlords seeking higher returns.
Beyond the North East, several other regions have now moved above the 8% yield mark. These include Yorkshire and the Humber, the West Midlands, the North West, Wales, and the East Midlands. This spread of growth suggests that opportunities for landlords are not limited to one specific part of the country.
Growing Returns for Landlords
Steve Cox described the latest figures as encouraging, noting that yields have increased annually across all regions. Only one area recorded a slight drop on a quarterly basis, which highlights the overall resilience of the market.
He pointed out that strong tenant demand has played a key role in supporting rental income, helping landlords achieve solid returns. With average yields now sitting above 8% nationwide, many investors are continuing to see the benefits of holding property assets.
A Changing Market Environment
Despite the positive figures, Cox also warned that the data mainly reflects conditions from the earlier part of the quarter, when the market was relatively stable. Since then, the environment has become more uncertain, with increased volatility affecting pricing and borrowing costs.
This shift has been particularly noticeable since March, when fluctuations in buy-to-let mortgage rates began to impact landlord activity. As a result, the market conditions currently faced by investors may differ from those captured in the earlier data.
Regional Differences Remain
While most regions recorded growth, not all areas performed equally. The South West and South East both saw modest increases in yields, continuing their gradual upward trend.
However, Greater London stood out as the only region to experience a quarterly decline. This reflects ongoing challenges in the capital, where higher property prices can limit rental returns compared to other parts of the country.
Landlord Activity Slows Slightly
The data also shows a slight drop in landlord investment activity during the first quarter. Purchase applications accounted for 33% of all submissions, down from 37% in the previous quarter.
This suggests that some investors may be taking a more cautious approach, particularly in response to market uncertainty and changing borrowing conditions. Fleet Mortgages expects that these pressures are more likely to affect new purchases rather than remortgages or product transfers.
Larger Loans and Portfolio Growth
Average loan sizes increased during the quarter, reaching around £210,000. This reflects both rising property values and the continued presence of experienced landlords in the market.
There has also been a noticeable rise in borrowing through limited companies, which accounted for 78% of all applications. This trend highlights a growing preference among landlords for structured investment approaches, often linked to tax and financial planning considerations.
Shift Towards Professional Landlords
The figures suggest that more experienced landlords are playing a larger role in the market. Around 63% of applications came from investors with at least four properties, indicating a strong presence of portfolio landlords.
At the same time, the proportion of landlords holding 15 or more properties reached 30% during the quarter. This points to a continued shift towards larger-scale operators who are expanding their portfolios despite wider market challenges.
Outlook for the Rental Market
Cox noted that the core fundamentals of the UK rental sector remain strong, even with recent volatility. Demand from tenants continues to support rental values, while many landlords are still looking to grow their portfolios over time.
He also highlighted the ongoing trend towards limited company borrowing, alongside the increasing influence of larger portfolio landlords. These developments are expected to shape the market in the months ahead.
Final Thoughts
Overall, the rise in rental yields across England and Wales signals a positive period for landlords, particularly in regions offering stronger returns. While short-term uncertainty may affect activity levels, the underlying demand for rental housing remains steady.
As the market continues to adjust, landlords will need to balance opportunities for growth with the risks linked to changing economic conditions. However, with yields holding above 8% nationally, the sector still offers attractive prospects for those prepared to navigate its challenges.
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