The Fleet Mortgages Buy-to-Let Rental Barometer found that yields were down annually by 0.1%, but quarterly, this rose from 7.4% in Q1 to 7.5% in Q2.
Fleet Mortgages said this showed a “continued period of yield stability” in the regions it lends in, backed by a “strong and sustained appetite” from landlords to maintain and expand their portfolios.
Wales reported the highest returns at 9%, representing a 0.7% yearly increase and a 1.4% quarterly rise. This was followed by the North West with 8.8% and the North East at 8.7%.
Quarterly rises of 0.4% were seen in the East Midlands, the North West and the South West.
There was a yearly decline in yield across four regions, with a 1.4% fall in North East, 0.8% decline in the West Midlands, 0.6% fall in East Anglia and 0.1% drop in Greater London.
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On a quarterly basis, the North East, West Midlands and East Anglia only showed a 0.5% fall in yields, and Fleet Mortgages said this was expected to be sustained for some time.
Rental values shoot up in the North East
Fleet Mortgages noted a 21.8% rise in average monthly rental values in the North East, followed by 7.8% in Wales and 6.5% in Greater London.
There was a quarterly decline seen in Yorkshire and the Humber, with a 1% fall, alongside a 1.6% decrease in the South West, a 3.5% drop in the South East and a 5.8% fall in the West Midlands.
Across all regions, rental values rose by 2.9% quarter-on-quarter.
Yorkshire and the Humber had the most affordable monthly rent figure of £861, while the most expensive was Greater London at £2,328.
Appetite for BTL remains
Fleet Mortgages’ lending data showed that landlords were expanding their portfolios, with 39% aiming to purchase and 54% owning four or more properties.
Some 14% of applications to the lender were from first-time landlords, which Fleet Mortgages said showed that the attraction of buy to let (BTL) was still strong.
Around 81% of applications were from limited companies.
Meanwhile, the lender’s average two- and five-year fixed rates fell from 4.63% to 4.35% and 5.15% to 5.13% respectively.
This was compared to market averages of 4.93% and 5.27%.
Steve Cox, chief commercial officer at Fleet Mortgages, said: “Our latest Rental Barometer shows yields across England and Wales continue to hold firm, underlining the enduring strength of the private rental sector and landlords’ commitment to delivering the supply required by sustained tenant demand.
“While we’ve seen some modest annual dips in specific regions, overall yields remain robust, with the quarterly increase to 7.5% reflecting a strong and stable foundation for landlords seeking long-term income and capital growth.
“It’s particularly encouraging to see Wales now leading the table with a 9% average yield, and the North West and North East remaining highly competitive. These areas continue to offer landlords a compelling mix of yield, affordability and tenant demand, all of which remain critical factors in building sustainable portfolios.”
He added: “While some Southern regions have lower yield percentages, this is normal given property prices. They continue to deliver in terms of capital appreciation, and monthly rental values remain high. The growth in rents across most regions – particularly the substantial 21.8% jump in the North East – illustrates tenant demand is still outpacing supply, supporting continued investment.
“It’s clear landlords are still very much in the market – over half of our business continues to come from those with four or more properties, and purchase demand has held steady despite wider economic pressures. It’s also pleasing to see first-time landlord activity staying consistent at 14%, which suggests new entrants are still seeing long-term value in buy to let.
“We’re also proud to be continually competitive on pricing, with our fixed rate products outperforming peer averages. Combined with strong rental yield and continued appetite, particularly from limited company landlords – now 81% of all applications – it shows there are still plenty of reasons to be optimistic about the future of the buy-to-let sector.”
