Landlords enjoyed a buoyant start to 2026 as rental yields rose across every region of England and Wales, though specialist lender Fleet Mortgages has cautioned that March’s market turbulence could take some of the shine off the second quarter.
According to Fleet’s latest Quarterly Rental Barometer, the average yield across England and Wales climbed to 8.1% in the first quarter, up 0.7 percentage points year-on-year and 0.4 points on the previous quarter. The figures reinforce what has become a familiar story for property investors: robust tenant demand continues to translate into healthy income returns, even as the wider mortgage market wobbles.
Once again, the North East led the pack with an average yield of 9.8%, its dominance at the top of the table now looking entrenched. It was joined above the 8% threshold by Yorkshire and Humberside (9.0%), the West Midlands and Wales (both 8.6%), the North West (8.5%) and the East Midlands (8.0%), a clear indication that the North-South yield divide remains firmly in place for buy-to-let investors chasing income.
Southern regions, while still trailing their northern counterparts, also made ground. The South West posted the strongest annual rise of any region, up 1.1 percentage points to 7.8%, followed by East Anglia at 7.2% and the South East at 6.9%. Even Greater London, long the laggard on yield, edged up to 6.1%.
Fleet was quick to stress, however, that the headline numbers mask a quarter that unfolded in two very different chapters. January and February offered relative calm, with mortgage rates drifting lower and affordability inching in landlords’ favour. March, by contrast, delivered a sharp jolt as global events pushed swap rates higher, triggering widespread product withdrawals and repricing across the buy-to-let market.
That turbulence, Fleet warned, is likely to be felt more keenly in the months ahead, especially among landlords weighing up new acquisitions. Purchase appetite had already begun to soften before the March wobble, with buy-to-let purchase applications accounting for just 33% of Fleet’s Q1 business, a sign that portfolio holders were already treading carefully.
Despite the choppier waters, the fundamentals underpinning the private rental sector look undimmed. Tenant demand remained strong nationwide in Q1, supporting rental values and in turn bolstering yields. Monthly rents rose in every region, with the North East posting an eye-watering 33.6% annual increase and Yorkshire and Humberside close behind at 31.0%.
Such resilient demand is proving vital in a higher-rate environment, helping landlords absorb steeper financing costs without eating into margins. Fleet’s own book bore this out, with average loan size ticking up to £210,000 during the quarter.
The data also paints a picture of a market increasingly dominated by seasoned investors. More than 63% of Fleet’s applications came from landlords holding four or more properties, while the proportion with 15 or more rose to 30% — underscoring the continued consolidation at the top end of the market.
Limited company structures, meanwhile, now account for 78% of Fleet’s applications, further evidence of the steady professionalisation of buy-to-let as investors seek more tax-efficient and structured ways to hold their portfolios.
Steve Cox, chief commercial officer at Fleet Mortgages, said the Q1 figures offered real encouragement but urged landlords to look past the immediate noise.
“The Q1 data paints a positive picture for landlords, with rental yields increasing across every region and average returns now sitting above 8% nationally,” he said. “That reflects the strength of tenant demand and how improved rental income continues to play in supporting landlord returns.”
Cox acknowledged, however, that the picture in the market today looks rather different from that of January. “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.”
Even so, he argued, the longer-term case for UK rental property remains compelling. “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. The sector remains well supported even as it adjusts to a more uncertain environment.”
For investors, the message from Q1 appears to be one of cautious optimism: the income story is holding firm, but the road through Q2 may prove rather bumpier than the one just travelled.
