Average rental yields increased on both a quarterly and annual basis in the final quarter of 2025, according to the latest Buy-to-Let Rental Barometer from Fleet Mortgages.

The data, which compares Q4 2024 with Q4 2025, showed national average yields rising by 0.3% year on year and by 0.2% quarter on quarter to 7.7%.

The North East remained the strongest-performing region, with average yields rising from 9.3% to 9.6%. This represented a quarterly increase of 0.6% and an annual uplift of 0.3%.

Four other regions also recorded average yields of 8% or more: Yorkshire and Humberside, the North West, the West Midlands and the East Midlands. Of these, the West Midlands saw the sharpest annual improvement, with yields climbing from 6.6% to 8.1%.

NORTH-SOUTH DIVIDE DECLINE?

Fleet said the figures pointed to a narrowing of the traditional North-South yield divide. The South West, East Anglia, the South East and Greater London all recorded year-on-year increases, with London’s average yield rising from 5.8% to 6.3%.

While Yorkshire and Humberside, the North West and Wales posted modest annual falls, the lender said overall conditions remained supportive, driven by strong tenant demand and continued rental growth.

PRICING

The barometer also showed easing mortgage pricing. Fleet’s average two-year fixed rate fell from 4.35% in Q3 to 4.27% in Q4, while its average five-year fixed rate reduced from 5.04% to 4.97% over the same period.

Limited company borrowing continued to dominate application volumes, accounting for 76% of submissions during the quarter, slightly down from 81% in Q3. Landlords with more than six buy-to-let properties made up 55% of applicants, while the average portfolio size increased to 14 properties from 12 in the previous quarter.

First-time landlord activity dipped marginally to 11% of applications, compared with 12% in Q3. Purchase transactions accounted for 37% of total business, with remortgaging and product transfers making up the remainder.

Steve Cox, chief commercial officer at Fleet Mortgages, said: “As this latest Rental Barometer confirms, average rental yields have continued to move in the right direction, both year-on-year and quarter-on-quarter, which will be welcome news for landlords.

“At a national level, yields are now close to 8%, while a number of regions are above that level. Regions in the North continue to lead the way but it is also a real positive to see yields rising across much of the South, which points to a more even market.

“While a small number of regions saw slight dips, the wider picture remains solid. We are seeing portfolios grow, with the average number of properties held by our landlord clients increasing again this quarter, showing ongoing confidence in buy-to-let investment.

“At Fleet we remain fully committed to the buy-to-let sector and to supporting advisers and their landlord clients. That means offering a wide range of keenly-priced products across our three core areas: standard, limited company and HMO/MUFB.

“Alongside improving mortgage rates, and greater levels of affordability, this breadth of choice helps advisers place cases with confidence in a market that continues to offer clear long-term opportunities.”