Rental yields rise again across England and Wales

Rental yields across England and Wales improved in the final quarter of 2025, extending gains seen earlier in the year, data shows.

Fleet Mortgages says its research shows that the strength of the yields reinforces the appeal of buy to let investment.

The lender’s Q4 Rental Barometer shows average returns rising on both an annual and quarterly basis, with the national yield reaching 7.7%.

That marks an increase of 0.3% compared with the same period a year earlier and a 0.2% uplift since Q3.

Northern regions lead rental yields

Fleet’s chief commercial officer, Steve Cox, said: “Average rental yields have continued to move in the right direction, both year-on-year and quarter-on-quarter, which will be welcome news for landlords.

“At a national level, yields are now close to 8%, while a number of regions are above that level.

“Regions in the North continue to lead the way but it is also a real positive to see yields rising across much of the South, which points to a more even market.”

He added: “While a small number of regions saw slight dips, the wider picture remains solid.

“We are seeing portfolios grow, with the average number of properties held by our landlord clients increasing again this quarter, showing ongoing confidence in buy to let investment.”

Most areas show yield rises

The North East once again delivered the strongest performance, pushing yields up to 9.6% following annual growth of 0.3% and a quarterly rise of 0.6%.

Four other areas also achieved average returns of 8% or more, including Yorkshire and Humberside, the North West, the West Midlands and the East Midlands.

Fleet points to a gradual closing of the long-standing yield gap between northern and southern markets.

The South West, East Anglia, the South East and Greater London all recorded year-on-year improvements, suggesting more balanced conditions across regions.

PRS is resilient

Although three areas posted marginal annual declines, the lender said the broader picture remained resilient.

Strong tenant demand alongside higher rents continue to underpin returns for landlords, even where growth softened slightly.

Limited company structures account for 76% of applications during the quarter, down from 81% previously.

More experienced investors continue to feature heavily, with landlords owning more than six properties representing 55% of applicants.

The average portfolio size rose again, increasing to 14 properties from 12 in the previous quarter.

Activity from first-time landlords slipped to 11%, but Fleet said this still reflected healthy interest from new entrants.

Purchases made up 37% of total business, with remortgaging and product transfers accounting for the remainder.