Rental yields reach 7.9% as landlord buying patterns diverge

What happened

Rental yields across England and Wales averaged 7.9% in the third quarter of 2026, according to Fleet Mortgages, up from 7.5% a year earlier. Its latest Rental Barometer recorded annual increases in eight of the 10 regions it covers. However, the lender’s application figures show that the region with the highest yield did not have the largest proportion of purchase business.

Yorkshire and Humberside led Fleet’s yield table at 9.3%, compared with 8.2% in Q3 2025. That was an increase of 1.1 percentage points, the largest annual gain reported. Purchase applications represented 43% of Fleet’s business in the region during Q3, below the 46% share recorded in Wales.

The East Midlands recorded the second-largest annual increase, with its average yield rising by 0.9 percentage points to 8.4%, Fleet said. The West Midlands and South East each gained 0.7 percentage points, reaching 8.2% and 7.2% respectively. These changes describe increases in yield rates, rather than percentage growth in rental income.

Greater London’s average yield increased from 5.9% to 6.4% over the year, while East Anglia rose from 6.6% to 7.0%, according to Fleet. The South West recorded a smaller annual change, moving from 7.0% to 7.1%. Fleet put the North East’s average at 9.2%, just below Yorkshire and Humberside.

The North West and Wales were the only regions where yields were lower than a year earlier, Fleet reported. The North West’s average remained above 8.0% despite a decline of 0.2 percentage points. In Wales, Fleet also recorded a quarterly fall, from 8.1% in Q2 2026 to 7.5% in Q3.

The background

Fleet Mortgages is a buy-to-let and specialist lender, and its quarterly barometer covers regional yields, rents and landlord activity. The purchase shares in the report relate to applications received by Fleet, not all transactions across England and Wales. A region’s purchase application share therefore measures the mix of the lender’s business there, rather than its share of national property purchases.

In general, a rental yield expresses annual rent as a proportion of a property’s price or value. A gross yield does not deduct costs, while a net calculation takes expenses into account, depending on the measure used. A headline yield should not be treated as the percentage a landlord will keep after mortgage payments, maintenance and other bills.

Fleet’s portfolio figures show a substantial presence of established landlords in its business. Its average landlord owned 18 investment properties in Q3 2026, compared with 16 in the preceding quarter and 12 a year earlier. Those averages describe Fleet’s landlord population; they do not establish that each customer bought six additional properties over the year.

Applications from landlords owning at least 15 properties accounted for 30% of Fleet’s total, while two-thirds came from those with four or more properties. First-time landlords also increased their share of applications, from 9% in Q2 to 10% in Q3. These figures describe application activity, not completed mortgage lending or completed purchases.

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What people are saying

Steve Cox, chief commercial officer at Fleet Mortgages, said landlords had been assessing changing mortgage prices, funding costs, the Renters’ Rights Act and the wider economy during 2026. He described rental yield as an important part of deciding whether an investment is worthwhile. His assessment was that the annual increases across most regions offered encouragement where the finances of a purchase remained sound.

Cox also said landlords needed to consider achievable rents, property prices, financing costs, tenant demand, property type and longer-term prospects together. That distinction matters because a high yield and a high monthly rent measure different things. A property can command a larger rent while producing a lower yield if its purchase price or value is also higher.

Fleet’s London figures illustrate that difference: the capital had the lowest average yield in the barometer, at 6.4%, but the highest average monthly rent. Its reported monthly rent increased from £2,364 in Q2 to £2,597 in Q3. The figures show why ranking regions by rent alone produces a different picture from comparing rental yields.

Cox pointed to Wales and the South West as examples of purchase activity not following a single yield pattern. In Wales, Fleet’s highest purchase share coincided with a quarterly decline in both yields and average monthly rents, with rents dropping from £1,214 to £1,079. In the South West, purchase applications rose from 23% to 34% of regional applications as yields recovered from 6.6% to 7.1%.

What happens next

For landlords considering a purchase, Fleet’s findings support comparing the property’s costs and likely income rather than selecting a region solely by its position in the yield table. A practical calculation starts with the proposed purchase price and a realistic annual rent, then considers financing and running costs separately. Time without a tenant also affects the income available to meet those bills.

Buyers should also keep the report’s annual and quarterly comparisons separate. Fleet’s South West yield increased from 6.6% to 7.1% between Q2 and Q3 2026, but its annual rise was only from 7.0% to 7.1%. The larger quarterly recovery should not be mistaken for the change over the full preceding year.

For renters, Fleet’s regional averages are not a forecast of what an individual landlord will charge at the next renewal. Cox stressed that rental markets differ both between regions and within them. Likewise, the application shares do not establish how many additional homes will become available to tenants, because an application is not a completed purchase or a newly advertised letting.

Fleet’s reported figures describe Q3 2026 rather than predicting yields in the following quarter. Any later comparison will need to distinguish changes in rents from changes in property prices or values, because both affect yield. Cox’s emphasis on local demand and property type also means a regional average is a starting point for assessment, not a return guaranteed to an individual buyer.

Why this matters

Fleet’s figures give landlords and prospective buyers a regional comparison, but not a ready-made investment decision. Wales had the highest purchase application share despite weaker yields, while London combined the lowest yield with the highest monthly rent. For an individual buyer, the useful test remains whether achievable rent covers the property’s financing and running costs. For renters, the regional figures describe broad patterns rather than predicting the rent on a particular home.