Landlords are doubling down on high-yielding rental investments in the North of England, defying economic headwinds and policy pressures, according to new figures from Fleet Mortgages.

The specialist buy-to-let lender’s Q1 2025 Rental Barometer reveals that rental yields remain robust across England and Wales, with northern regions once again outpacing the South.

The North East leads the pack, posting an average gross yield of 9.2%, followed by the North West at 8.4% and Yorkshire & Humberside at 8.1%.

Despite persistent talk of landlords retreating from the market, the data points to sustained investment activity, particularly in regions offering strong rental income relative to property values.

Across England and Wales, the average rental yield held steady at 7.4% quarter-on-quarter, up 0.3% from the same period last year.

SOLID RETURNS

Steve Cox, Chief Commercial Officer at Fleet Mortgages, said: “There has been much discussion around landlords exiting the market, but our data shows a steady level of purchase activity alongside remortgages. Landlords who manage their portfolios effectively are still benefiting from solid returns.”

The figures show the continued pull of the North for new entrants to the sector. First-time landlords made up 19% of all buy-to-let applications in the East Midlands, 16% in Yorkshire & Humberside, and 15% in the North East.

In contrast, Greater London, the South West and the West Midlands saw the lowest levels of first-time activity, each recording just 10%.

NORTHERN SURGE

Fleet Mortgages attributed the northern surge to a combination of lower entry costs and stronger yield potential. The North East remains the most affordable rental market, with average monthly rents at £739 and the lowest average mortgage loans at just £85,000.

In stark contrast, returns in the South lagged behind: Greater London yielded just 6% on average, with the South East and East Anglia at 6.5% and 6.7% respectively. Higher property prices and larger loan sizes continue to depress yields in these regions.

Limited company structures remain the dominant borrowing method in the North East, with 96% of applications made through corporate entities, compared to just 68% in Greater London – a trend that suggests growing sophistication among portfolio landlords.

Fleet also observed regional splits in mortgage activity. In the North East, purchase applications (54%) outstripped remortgages (46%) — the only region to see this reversal. In London and Wales, however, the picture was skewed towards remortgaging, with 67% and 66% of activity respectively.

LANDLORDS ACTIVELY PURCHASING

Cox added: “The narrative that landlords are solely focused on remortgaging is increasingly challenged by our data. Where opportunities exist, landlords – both new and experienced – are actively purchasing.”

Despite regulatory changes, including the higher 5% stamp duty surcharge introduced last year, Fleet’s data suggests that committed landlords are pressing ahead with expansion plans. With tenant demand continuing to exceed supply, upward pressure on rents shows no sign of abating.

But Cox also warned: “We need to ensure policies support the continued supply of rental homes, rather than discouraging investment.

“The private rental sector plays a vital role in the housing market, and it is clear many landlords – particularly in high-yield regions – are keen to invest further.”