The north-south divide in rental yields is showing signs of narrowing, as the latest data reveals that some northern regions are stabilising their returns while London experiences an uptick. Fleet Mortgages' Rental Barometer for Q2 2026 shows a slight reduction in the disparity between northern and southern England.
Average rental yields across England and Wales stood at 7.8% in Q2 2026, up from 7.5% in the same period last year but down from 8.1% in Q1 2026. This indicates some market fluctuations within the year, despite the overall increase.
Regional variations persist, with the North East maintaining its position as the highest-earning region at 9.2%, albeit a 0.6 percentage point decrease from Q1. Yorkshire and Humberside saw a 0.3 percentage point drop, while the West Midlands fell by 0.6 points. In contrast, Greater London's yields rose to 6.3% (from 6.1%) in Q2, while the South East remained stable at 6.9%. This suggests that investment opportunities are becoming more widespread.
The buy-to-let sector has seen a resurgence, with purchase business increasing from 33% of mortgage applications in Q1 to 36% in Q2. Portfolio landlords (owning four or more properties) accounted for over 62% of these applications, while limited company borrowing made up 78% of all applications.
The mortgage market experienced a challenging start to the quarter due to geopolitical events and rising swap rates. However, conditions improved later on, allowing lenders to reduce mortgage rates and reintroduce withdrawn products. Steve Cox, chief commercial officer at Fleet Mortgages, attributes this market recovery to a more positive environment for landlords, driven by sustained tenant demand and increased purchase activity.