Average rental yields across England and Wales continued to rise year-on-year, although six out of 10 regions recorded a quarterly decline, according to Fleet Mortgages’ latest Buy-to-Let Rental Barometer for Q2 2026.

The quarterly barometer provides a regional snapshot of rental yield trends, comparing Q2 2026 with Q2 2025.

At a national level, average yields across England and Wales rose by 0.3% annually to 7.8%, although quarter-on-quarter there was a dip from 8.1% in Q1.

There has been movement in the regional rankings since the previous quarter, with the North East continuing to lead the table.

Average yields in the region were up 0.5% year-on-year to 9.2%, although they fell 0.6% quarter-on-quarter to 9.2%.

The North West has moved into second spot with an average rental yield of 8.8% and six regions continue to hold above 8%, with the other four being Yorkshire & Humberside, Wales, and both the East and West Midlands.

North outperforming the South

Higher-yielding areas in the North and Midlands are continuing to outperform the South, with Wales and the South West seeing an annual fall.

However, the majority of regions have seen a quarterly fall in average yields, with the only exceptions being the East Midlands, Greater London and the North West which saw increases, and the South East which stayed the same.

Both Fleet’s own average product rates and market average two- and five-year fixed-rates rose quarter-on-quarter, which the lender said was unsurprising given the level of volatility witnessed in the early part of the quarter, due to the impact of the war in Iran.

The lender did however highlight a shift in market conditions in the latter half of Q2 which had provided greater stability and allowed lenders, including Fleet, to reintroduce products withdrawn earlier in the year, and make a series of price cuts to existing products.

There was positive news in terms of purchase activity which grew quarter-on-quarter for Fleet from 33% in Q1 to 36% in Q2.

This, the lender said, was a figure closer to that of a year ago when purchases accounted for 39% of all lending business and was a positive move for the sector.

The share of applications received from landlords with six-14 properties grew from 26% in Q1 to 30% in Q2, while landlords with 15 or more properties accounted for 26% of applications.

At the same time, first-time landlord applications represented 9% of all business, slightly down on the 11% recorded in the first three months of the year.

Professionalisation of the sector

Fleet also highlighted how the professionalisation of the landlord community was continuing with the average number of investment properties held by Fleet borrowers maintained at 16, compared to 10 in Q2 last year.

Adding to this theme, limited company business continued to dominate with 78% of all borrowing coming from corporate vehicles, compared to just 22% for private investors.

Steve Cox, chief commercial officer at Fleet Mortgages, commented: “Q2 for the buy-to-let, and wider, mortgage market has effectively been a ‘flip reverse’ of Q1.

It began with considerable uncertainty as financial markets reacted to events in the Middle East, meaning funding costs increased and lenders had to adjust pricing accordingly.

“However, the latter weeks of June in particular have been much more encouraging, with greater stability returning, swap rates easing and lenders like ourselves once again able to compete through lower rates and a broader range of products.

“While it’s important not to assume this calmer environment will continue indefinitely, the market is undoubtedly ending the quarter in a stronger position than many expected a few months ago.

“The MPC has held Bank Base Rate, inflation looks like it has, to some extent, been contained and advisers have a much-improved range of options for their landlord borrower clients.

“Our figures also continue to show professional landlords remain active. Purchase activity has picked up, portfolio landlords continue to expand where opportunities exist and limited company borrowing remains the preferred route for most investors.”

The new normal

Cox said these are all positive indicators for the underlying strength of the buy-to-let sector.

He commented: “Periods of volatility have become a feature of the mortgage market rather than an exception, and advisers and landlords increasingly understand this ‘new normal’.

“The important point is that when conditions improve, as they have during the latter part of this quarter, the market is able to respond quickly, providing borrowers with greater choice and improved pricing.

“That should give confidence as we move into the second half of the year, even if we continue to expect markets to remain sensitive to wider economic, UK political and geopolitical events.”