Looking at our recently published Q1 2026 Rental Barometer data in isolation, there is clearly a strong and positive story to tell. Average rental yields across England and Wales rose to 8.1%, up 0.7% year-on-year and 0.4% over the quarter, with every single region in which Fleet lends recording an annual increase.
That is not something we see often, and it speaks to the underlying demand for rental property and the ability of landlords to generate income and yield even in a higher rate environment.
However, it would be a mistake to view this quarter as one single period. In reality, Q1 was split into two very distinct phases. January and February were relatively stable, with pricing easing, swap rates moving in the right direction, increased product and criteria choice, and a growing sense affordability pressures might begin to soften. Then March arrived and changed the picture entirely.
Geopolitical events, particularly the war in Iran and wider conflict in the Middle East, drove a sharp rise in swap rates and forced lenders, ourselves included, to act quickly. That meant product withdrawals, repricing, and a level of market volatility that has been difficult for everyone involved.
The Rental Barometer data we have published largely reflects those earlier, calmer months, and that is an important point to keep in mind.
STRONG YIELDS AND CLEAR REGIONAL PATTERNS
Even with that caveat, the strength in yields should not be ignored. The North East continues to lead the way at 9.8%, while a number of regions across the Midlands and the North are now comfortably above the 8% mark.
Landlords are clearly focused on areas where returns are strongest, and that is reflected in both yield levels and investor behaviour. Portfolio landlords continue to dominate activity, and limited company borrowing now accounts for a significant majority of applications.
At the same time, there are signs of a more cautious approach. Purchase activity has fallen as a share of total business, with landlords placing more emphasis on managing existing portfolios rather than expanding them. That shift was already visible before March, and it is likely to become more pronounced as higher pricing feeds through into Q2.
MARCH VOLATILITY WILL SHAPE WHAT COMES NEXT
The key question now is what happens next, and that is where Q2 data will be far more telling. The events we saw in March are not fully reflected in Q1 figures, but they will have a clear impact on lending activity, pricing, and landlord sentiment in the months ahead.
We are already seeing lenders return to the market as swap rates have eased from their peaks, but not with the same breadth or depth of product that was available earlier in the year. That is simply the reality of the current environment. Things can move very quickly, and there are no guarantees that we won’t see further periods where lenders need to react in the same way again.
This is not a position anyone wants to be in, but it is the nature of a market that is being driven by global events as much as domestic factors. Affordability remains a key issue, and higher rates will inevitably have an impact on both new investment and refinancing decisions.
ADVICE HAS NEVER BEEN MORE IMPORTANT
If there is one clear takeaway from this period, it is the value of advice. Brokers have had to deal with fast-moving changes, tight deadlines, and shifting lender positions, all while supporting their landlord borrower clients through a very uncertain period.
Without that support, many borrowers would have struggled to make sense of what was happening, let alone secure the right outcome. Instead, advisers have provided clarity, stability, and a steady hand at a time when it has been most needed.
That is exactly why we operate an intermediary-only model. Periods like this underline the importance of professional advice and the role brokers play in protecting client interests. It is not just about accessing products, it is about understanding the market, reacting to change, and making informed decisions under pressure with client’s best interests always at the heart of this.
SOLID FOUNDATIONS, BUT CAUTION IS NEEDED
Stepping back, the fundamentals of the private rental sector remain strong. Tenant demand is still there, yields are holding up, and there is clear evidence experienced landlords continue to see opportunity.
However, it would be naive to think recent events will not continue to have a sizeable impact. Confidence will be tested, affordability will remain under pressure, and activity levels may well shift as a result.
The Q1 data gives us a clear view of where the market has been, but the next set of figures will tell us much more about where it is heading.
