Landlords are achieving strong returns across England and Wales after another uptick in rental yields, led by regions in the north of the country.
Buy-to-let property investors continue to look at adding properties to their rental portfolios, according to lender Fleet Mortgages, which noted 39% of its customers were enquiring to expand their holdings.
More than half (55%) of applications received by the lender in the first quarter of this year were from landlords who owned four or more properties; although new investors continue to come to the market, with a 3% increase in the number of applications from first-time landlords compared with Q4 2024.
Fleet’s Rental Barometer, released yesterday, also revealed that the boost in enquiries coincided with landlords reporting higher rental yields from their properties, after a 0.3% annual increase brought the average yield from rental homes in England and and Wales to 7.4%.
With most areas experiencing a rise in rental yields over the past 12 months, Steve Cox, chief commercial officer at Fleet Mortgages, noted that the market is showing stability, with the slow and steady rise proving “a real positive for landlords”.
Other factors supporting the market, according to Cox, include the continued supply-demand imbalance keeping prices afloat, falling interest rates, and affordability that is “easier to achieve across the board”.
Strongest rental yields in the north
The property market overall remains varied across the country, with the northern regions generally outperforming the south when it comes to rental and house price growth. Compared to the south, though, prices remain considerably more affordable, which boosts appetite in these areas during times of financial uncertainty.
Rental demand in the north continues to soar as more tenants look for affordable city living options away from the capital; while also benefitting from the improving jobs markets in these areas.
Fleet’s research shows that the highest-yielding region is currently the North East of England, with average rental yields of 9.2% for the first quarter of this year. This area also experienced the biggest annual increase of 0.8%.
The North West now has the second highest rental yields of the country, at 8.4% in the latest figures which is a 0.5% rise from Q1 2024.
Yorkshire and Humberside, which this time last year was the highest-yielding location according to Fleet, is the only region to have seen a small dip in its average yields, although it remains towards the top of the list with an average of 8.1%. This is down by 0.4% from last year.
| Region | 2024 Q1 | 2025 Q1 | y/y change |
|---|---|---|---|
| North East | 8.4% | 9.2% | 0.8% |
| North West | 7.9% | 8.4% | 0.5% |
| Yorkshire and Humberside | 8.5% | 8.1% | -0.4% |
| Wales | 7.4% | 7.7% | 0.3% |
| West Midlands | 7.6% | 7.7% | 0.1% |
| East Midlands | 6.6% | 7.1% | 0.5% |
| South West | 6.2% | 6.7% | 0.5% |
| East Anglia | 6.4% | 6.7% | 0.3% |
| South East | 6.1% | 6.5% | 0.4% |
| Greater London | 5.9% | 6.0% | 0.1% |
| England & Wales (Total) | 7.1% | 7.4% | 0.3% |
What the future holds
A number of factors will continue to influence the UK rental market, from borrowing costs for landlords to the upcoming Renters’ Rights Bill, as well as the ongoing supply-demand imbalance.
Tenants’ experiences of their rental homes has increased in importance, as over the years not only have perspective first-time buyers been priced off the property ladder and therefore remained renting, but there has also been a shift towards a more flexible, well-located lifestyle that renting can offer to young professionals.
The report notes that rental yields are “likely to remain between 5% to 9% across the various regions, not least due to the continued strong tenant demand set against the relative lack of property supply available to them”.
Cox added: “Activity levels – in terms of both remortgage and purchase – have remained strong, which suggests landlords do want to add to portfolios, and can sense the strong market for them in terms of tenant demand, and what this means for rental levels and ongoing yield/profitability.”
If you’re a property investor seeking your next high-yielding property investment opportunity in one of the UK’s top-performing locations, get in touch with BuyAssociation today.
