The long-established gap between rental yields in the North and South of England has narrowed during the second quarter of 2026, according to Fleet Mortgages' latest Rental Barometer.
The Fleet Mortgages Quarterly Rental Barometer provides a regional snapshot of rental yield trends, with this iteration comparing Q2 2026 to Q2 2025. At a national level, average yields for England and Wales rose by 0.3% annually to 7.8%. Quarter-on-quarter, however, this marked a dip from 8.1% in the first quarter.
The North East continues to offer the highest average rental yield at 9.2%, although this dropped by 0.6% from the previous quarter. Yorkshire and Humberside fell by 0.3%, while the West Midlands also declined by 0.6%. By comparison, Greater London saw yields improve from 6.1% to 6.3% during the quarter, while the South East held steady at 6.9%.
Fleet said the data suggests the traditional North/South divide remains, but is becoming less pronounced as rental markets across England and Wales mature and the higher-yielding regions in the North begin to plateau.
Elsewhere in the buy-to-let market, Fleet described Q2 as a quarter of two distinct halves. The opening weeks saw mortgage pricing come under significant pressure as financial markets reacted to the conflict in Iran and rising swap rates. Conditions improved during the latter half of the quarter, however, allowing lenders to begin reducing rates again and reintroduce products withdrawn during the earlier volatility.
Fleet believes this improving lending environment is likely to support landlord confidence during the second half of the year, though it cautioned that market volatility is becoming a more regular feature and investors should continue taking a longer-term view.
The lender's own figures suggest landlords remain active. Purchase business increased from 33% of applications in the first quarter to 36% in the second, while more than 62% of applications came from portfolio landlords owning four or more properties. Limited company borrowing also remained dominant, accounting for 78% of all applications.
Key regional yield figures for Q2 2026 include:
- North East: 9.2%, down 0.6% from Q1
- Yorkshire and Humberside: down 0.3% from Q1
- West Midlands: down 0.6% from Q1
- Greater London: up from 6.1% to 6.3%
- South East: steady at 6.9%
"Northern and Midlands' regions, along with Wales, continue to offer some of the strongest rental yields in the country and remain attractive areas for landlords looking to maximise income," said Steve Cox, chief commercial officer at Fleet Mortgages.
"One of the more interesting themes from this quarter's Rental Barometer data is that the gap between North and South does appear to be narrowing slightly, which suggests opportunities continue to exist across a much broader range of locations."
He added that the wider mortgage market had also shown signs of recovery. "Equally encouraging is the way the wider mortgage market has recovered over the course of the quarter," he explained.
"We started Q2 dealing with significant uncertainty as funding costs rose and pricing came under pressure, but conditions have improved considerably in recent weeks, allowing lenders to reduce rates and expand product choice once again."
"That creates a much more positive backdrop for landlords than appeared likely earlier in the quarter," Cox continued. "Tenant demand remains strong, purchase activity has picked up again and professional landlords continue to invest where they see long-term value."
He concluded: "Of course, recent years have taught us that markets can change quickly, so landlords should continue to expect periods of volatility. The important point is the fundamentals of the private rented sector remain strong and those taking a long-term approach should continue to find attractive opportunities across the market."
