The Fleet Mortgages Buy-to-Let Rental Barometer for the period found that the strongest rental yield growth was seen in the North East, where this came to 9%.
This was followed by the North West at 8.5%, while Yorkshire and the Humber recorded an average yield of 8.2%.
In Q3, rental yields in the South West stood at 7%, while in East Anglia this was 6.6%.
Fleet Mortgages said these regions were attractive to landlords because of the strong yields, lower property prices and steady tenant demand.
By contrast, rental yields fell by 0.7% in the North East and 0.1% in the West Midlands.
Are your clients ready for the first Making Tax Digital reporting deadline?
Sponsored by BM Solutions
Nationally, there was a 0.3% annual rise in average rental yields across England and Wales, coming to 7.5% in Q3. The lender suggested this reflected a long period of stability and resilience in the sector.
Biggest annual gains in Wales and the South West
As for the regions that saw strong gains compared to the same period last year, Wales recorded the largest growth of 1% to an average rental yield of 8.2%, while the South West saw a 0.9% uplift.
The annual change in rental yields was flat across both Greater London and East Midlands, which were unchanged from last year at 5.9% and 7.5% respectively.
|
Average rental yields |
YOY change |
||
|
Region |
Q3 2024 |
Q3 2025 |
|
|
North East |
9.7% |
9% |
-0.7% |
|
North West |
8% |
8.5% |
0.5% |
|
Wales |
7.2% |
8.2% |
1% |
|
Yorkshire and the Humber |
7.7% |
8.2% |
0.5% |
|
East Midlands |
7.5% |
7.5% |
0% |
|
West Midlands |
7.6% |
7.5% |
-0.1% |
|
South West |
6.1% |
7% |
0.9% |
|
East Anglia |
5.9% |
6.6% |
0.7% |
|
South East |
6.1% |
6.5% |
0.4% |
|
Greater London |
5.9% |
5.9% |
0% |
|
England and Wales (total) |
7.2% |
7.5% |
0.3% |
A mixed picture for rental growth
Fleet Mortgages recorded a 3.2% rise in average rents month-on-month, with the highest rents in Greater London at £2,165 per month, the South East at £1,662 and the West Midlands at £1,563.
Annual rent growth was 10.4%, led by the West Midlands, which saw a growth of 21.2%, the North East at 20.8% and Yorkshire and the Humber at 19.2%.
There were variances in quarterly changes, with notable rises of 36.4% and 25.3% in the West Midlands and Yorkshire and the Humber respectively.
However, this was offset by declines in East Anglia, with an 8.5% fall, Wales, with a drop of 7.6%, and Greater London, with a 7% decrease.
Fleet Mortgages said this was a reflection of localised supply and demand imbalances.
More professionalisation in the market
Fleet Mortgages said limited company borrowing made up 81% of applications in Q3, indicating a trend of landlords looking to manage costs and compliance through professionalisation.
Portfolio landlords also accounted for a significant share of business, with more than 61% of applications coming from those with four or more properties and 23% from landlords with 15 or more properties. The latter was up from 16% in Q2.
Further, first-time landlords represented 12% of applications, suggesting there was still interest from this part of the market.
Purchases made up 38% of the lender’s business in Q3, while the remainder came from remortgages and product transfers.
Steve Cox, chief commercial officer at Fleet Mortgages, said: “Our latest Rental Barometer reinforces just how resilient and adaptable the private rental sector, and specifically landlord activity within it, has become. Yields across England and Wales edged up for the second quarter in a row, driven by sustained tenant demand and a market that, while challenging, continues to offer opportunities for well-structured and well-capitalised landlords.
“What we are witnessing is a marked shift towards professionalism. Over four-fifths of our applications are now from limited companies, and the growth in landlords with 15 or more properties is particularly striking. Rather than exiting the sector, many landlords are scaling up, refinancing portfolios, and structuring their businesses in ways that help them absorb regulatory and cost pressures more effectively, while still pursuing property purchases.
“Affordability remains a hurdle, especially for those entering the market for the first time, but with tenant demand consistently outstripping supply, rental growth continues to be a strong driver of yields. This dynamic, combined with more competitive mortgage pricing following the Bank of England’s recent rate cut, gives advisers plenty of reasons to talk positively about the sector’s long-term outlook with their landlord borrower clients.
“The message from our data is clear: buy to let remains a viable and attractive proposition for professional landlords who are prepared to adapt, and for advisers who want to support their clients in building sustainable portfolios.”
