Rental yields increased annually in every region of England and Wales in the first quarter of 2026, although Fleet Mortgages has warned that sharper funding pressures at the end of the period are likely to weigh on buy-to-let activity in the months ahead.
Fleet Mortgages’ latest Rental Barometer, comparing Q1 2026 with Q1 2025, showed average rental yields rose 0.7% year-on-year and 0.4% quarter-on-quarter to 8.1% nationally.
The north east remained the strongest yielding region, with average yields rising 0.6% annually and 0.2% on the quarter to 9.8%. Fleet said six regions now have average rental yields above 8%, including Yorkshire and Humberside, the West Midlands, the North West, Wales and the East Midlands.
The lender said the figures continued to highlight a regional divide, with higher-yielding locations in the North and Midlands still outperforming southern regions. However, it added that the South West and South East also recorded yield growth, suggesting tenant demand remained firm across much of the market. Greater London was the only region to post a slight quarterly fall in yield.
While the barometer painted a broadly positive picture for much of the quarter, Fleet said conditions changed materially in March as market volatility returned. It noted that average two-year and five-year fixed rates had fallen over the quarter, alongside reductions in its own pricing, but said this was unlikely to continue into Q2.
According to Fleet, January and February were relatively stable, with mortgage pricing easing, but March brought greater disruption as geopolitical events and higher swap rates fed through into the market. It said buy-to-let lending had been particularly exposed because of its sensitivity to funding costs.
The lender’s data also suggested some cooling in purchase activity. The share of applications for purchase business fell from 37% in Q4 2025 to 33% in Q1 2026, and Fleet said purchase lending was likely to come under greater pressure than remortgage and product transfer business if current conditions persist.
Elsewhere, the data pointed to continued concentration among larger landlords and company structures. Average loan sizes increased to £210k during the quarter, while limited company borrowing accounted for 78% of all applications. More than 63% of applications came from landlords holding four or more properties, and the proportion of borrowers with portfolios of 15 or more properties rose to 30%.
Steve Cox, chief commercial officer at Fleet Mortgages, said: “This latest Rental Barometer shows a very positive picture for much of Q1, with rental yields rising across every region in England and Wales on an annual basis, and only one region showing any sort of quarterly dip.
“That reflects the strength of tenant demand and the ability of landlords to generate solid income returns, with average yields now sitting above 8% nationally.”
He said: “We have also seen more regions moving above that 8% level, particularly across the North and Midlands, but it’s equally encouraging that yields have continued to rise across the South as well, pointing to a broad base of demand right across the country.
“However, it is important to stress that much of this data reflects the first two months of the quarter, when conditions were far more stable and pricing was easing. The market we are operating in today looks very different and continues to be extremely volatile for obvious reasons.”
Cox said: “The impact of global events, particularly in the Middle East, has driven a sharp increase in swap rates, leading to product withdrawals and higher pricing across the market.
“This is likely to have a much greater impact on activity as we move through Q2, especially on the purchase side.”
He added: “That said, the underlying fundamentals of the UK private rental sector remain incredibly strong. We are continuing to see landlords looking to grow their portfolios, larger portfolio operators increasing their presence, and a sustained shift towards limited company borrowing.
“So while the market backdrop has clearly shifted in recent weeks, the combination of rising yields, strong tenant demand and ongoing investor appetite means buy-to-let remains well supported, even as it adjusts to a more uncertain financing environment.”
