Rental yields across England and Wales edged higher in the third quarter of 2025, with most regions posting annual gains and the national average reaching 7.5%, according to Fleet Mortgages’ latest Buy-to-Let Rental Barometer.

The North East remained the strongest yielding region at 9%, despite a marginal dip of 0.7% on last year, while the North West followed at 8.5%. Wales recorded the biggest improvement, with yields up by a full percentage point to 8.2%. Gains were also notable in the South West, up 0.9% to 7%, and East Anglia, where yields climbed 0.7% to 6.6%.

Overall, Fleet said yields rose by 0.3% compared with Q3 2024, underscoring the stability and resilience of the private rented sector.

REGIONAL VARIATIONS

While most regions recorded uplifts, the West Midlands posted a fractional decline of 0.1%, with the East Midlands and Greater London flat year-on-year.

Rental values continued to rise, with average monthly rents up 3.2% during the quarter and annual growth of 10.4%. The West Midlands led with a 21.2% annual increase, followed by the North East at 20.8% and Yorkshire & Humberside at 19.2%. Quarterly figures were more uneven, with rents in East Anglia, Wales and London falling. Fleet said the variations reflected localised supply and demand imbalances.

PROFESSIONALISATION OF LANDLORDS

Fleet highlighted a clear shift towards professionalisation in the landlord sector. Limited company structures now account for 81% of its applications, while portfolio landlords dominate activity, with 61% of business coming from clients holding four or more properties. Almost a quarter of applicants held 15 or more, up from 16% in the previous quarter.

First-time landlord activity remained steady at 12%, showing continued appetite from new entrants despite affordability challenges.

MARKET BACKDROP

The quarter saw the Bank of England reduce the base rate from 4.25% to 4%, easing mortgage pricing. Average market rates fell by around 20bps on two-year fixes and 15bps on five-year fixes. Fleet reduced its own five-year deals by 10bps to 5.04%, while maintaining two-year fixes at 4.35%.

Purchases accounted for 38% of Fleet’s business in Q3, with the balance made up of remortgaging and product transfers.

Steve Cox, chief commercial officer at Fleet Mortgages, said: “Yields across England and Wales edged up for the second quarter in a row, driven by sustained tenant demand and a market that, while challenging, continues to offer opportunities for well-structured and well-capitalised landlords.

“What we are witnessing is a marked shift towards professionalism. Rather than exiting the sector, many landlords are scaling up, refinancing portfolios, and structuring their businesses in ways that help them absorb regulatory and cost pressures more effectively, while still pursuing property purchases.

“The message from our data is clear: buy-to-let remains a viable and attractive proposition for professional landlords who are prepared to adapt, and for advisers who want to support their clients in building sustainable portfolios.”