Fleet’s data, which compares Q1 2026 with Q1 2025, showed average rental yields rose 0.7% year on year and 0.4% on a quarterly basis to 8.1% nationally.
The lender said the figures point to continued tenant demand and resilient rental income, with average monthly rents rising in every region.
On an annual basis, the strongest rental growth was recorded in the North East at 33.5%, followed by Yorkshire & Humberside at 31% and the West Midlands at 29%.
Fleet said this continued to highlight a regional divide, with landlords focusing on areas where income returns are stronger, particularly as financing costs remain a key consideration.
By contrast, rental growth in the North West was broadly flat compared with Q1 2025, with rents increasing by less than 1%, suggesting the market may be starting to stabilise after a period of stronger growth.
Fleet said yields elsewhere either held firm or continued to rise, with notable quarterly increases in Wales, the South West and the West Midlands.
However, the lender said the Q1 figures need to be viewed in the context of how the quarter developed.
It said January and February were relatively stable, supported by easing mortgage rates and improving affordability, but conditions shifted in March as global events pushed up swap rates, prompting product withdrawals and repricing across the mortgage market.
Fleet said this change in market conditions could affect landlord activity in Q2, particularly among those looking to buy new properties.
The lender noted that purchase applications had already started to soften during Q1, falling to 33% of total business.
Despite that, Fleet said the underlying fundamentals of the private rental sector remained strong, with tenant demand continuing to support rental values and yields.
The lender also reported that its average loan size increased to £210,000 during the quarter, which it said reflected the pressure of higher financing costs.
Fleet said the sector continued to be driven by more experienced landlords. More than 63% of applications came from landlords with four or more properties, while the proportion of those with 15 or more properties rose to 30%.
Limited company borrowing also continued to dominate, accounting for 78% of all Fleet applications in Q1.
Steve Cox, chief commercial officer at Fleet Mortgages, commented: "The Q1 data paints a positive picture for landlords, with rental yields increasing across every region and average returns now sitting above 8% nationally. That reflects the strength of tenant demand and how improved rental income continues to play in supporting landlord returns.
"However, it is important to recognise that much of this data reflects the first two months of the quarter, when conditions were more stable and mortgage pricing was easing. The market we are operating in now looks quite different following a continuation of the volatility we saw from March.
"The increase in swap rates and the resulting changes to product availability and pricing are likely to have an impact on landlord activity, particularly when it comes to new purchases. We have already seen some signs of a more cautious approach, and that may continue in the short term.
"That said, the fundamentals of the UK private rental sector remain strong. Demand from tenants is not going away, yields are holding up well, and landlords should continue to take a long-term view of their investments.
"As we move through Q2, it will be important to see how these recent market changes feed through into activity and sentiment, but the sector remains well supported even as it adjusts to a more uncertain environment."
