Average rental yields across England and Wales rose annually in Q2 2026, though six out of 10 regions recorded a quarterly dip, according to buy-to-let specialist lender Fleet Mortgages' latest Buy-to-Let Rental Barometer.
The quarterly barometer provides a regional snapshot of rental yield trends, with this instalment comparing Q2 2026 to Q2 2025. At a national level, average yields for England and Wales rose by 0.3% annually to 7.8%. Quarter-to-quarter, however, there has been a short-term dip from 8.1% in Q1.
There has been movement in the regional table since the last quarter, but the North East continues to lead with annual rental yields up by 0.5%. Quarter-to-quarter it has seen a fall of 0.6% to 9.2%.
The North West has moved into second spot with an average rental yield of 8.8%, and six regions continue to hold above 8%, with the other four being Yorkshire & Humberside, Wales, and both the East and West Midlands.
Higher-yielding areas in the North and Midlands continue to outperform the South, with Wales and the South West seeing an annual fall in rental yields. The majority of regions saw a quarterly fall in average yields, with the East Midlands, Greater London and the North West the only exceptions to see increases, while the South East held steady.
Rate volatility gives way to greater stability
Both Fleet's own average product rates and market average two- and five-year fixed rates rose quarter-on-quarter, which the lender said was unsurprising given the volatility witnessed in the early part of the quarter as a result of the war in Iran.
The lender highlighted a shift in market conditions during the latter half of Q2, which brought greater stability and allowed lenders, including Fleet, to reintroduce products withdrawn earlier in the year and cut prices on existing ones.
Purchase activity also grew quarter-on-quarter for Fleet, rising from 33% in Q1 to 36% in Q2. The lender said this figure moved closer to that of a year ago, when purchases accounted for 39% of all lending business, marking a positive shift for the sector.
Professionalisation trend continues
The share of applications from landlords with six to 14 properties grew from 26% in Q1 to 30% in Q2, while landlords with 15 or more properties accounted for 26% of applications. First-time landlord applications, meanwhile, represented 9% of all business, slightly down on the 11% recorded in the first quarter.
Fleet also pointed to continued professionalisation within the landlord community:
- the average number of investment properties held by Fleet borrowers rose to 16, up from 10 in Q2 last year
- limited company business continued to dominate, accounting for 78% of all borrowing, compared with 22% for private investors
Steve Cox, chief commercial officer at Fleet Mortgages, described Q2 as a "flip reverse" of Q1. "It began with considerable uncertainty as financial markets reacted to events in the Middle East, meaning funding costs increased and lenders had to adjust pricing accordingly."
"However, the latter weeks of June in particular have been much more encouraging, with greater stability returning, swap rates easing and lenders like ourselves once again able to compete through lower rates and a broader range of products," he adds.
"While it's important not to assume this calmer environment will continue indefinitely, the market is undoubtedly ending the quarter in a stronger position than many expected a few months ago," Cox continues. "The MPC has held Bank Base Rate, inflation looks like it has, to some extent, been contained, and advisers have a much-improved range of options for their landlord borrower clients.
"Our figures also continue to show professional landlords remain active. Purchase activity has picked up, portfolio landlords continue to expand where opportunities exist, and limited company borrowing remains the preferred route for most investors. Those are all positive indicators for the underlying strength of the buy-to-let sector.
"Periods of volatility have become a feature of the mortgage market rather than an exception, and advisers and landlords increasingly understand this 'new normal'. The important point is that when conditions improve, as they have during the latter part of this quarter, the market is able to respond quickly, providing borrowers with greater choice and improved pricing.
"That should give confidence as we move into the second half of the year, even if we continue to expect markets to remain sensitive to wider economic, UK political and geopolitical events."
