The average rental yield for buy-to-let properties across England and Wales rose to 7.4% in the first quarter of 2025, marking a 0.3% increase year-on-year, according to the latest Buy-to-Let Rental Barometer from Fleet Mortgages.
The report showed yields holding steady from the previous quarter and highlighted a stabilisation in yield growth after a period of larger increases in 2024.
Fleet noted that rental yields remained “almost universally positive”, with only Yorkshire and Humberside recording a year-on-year fall – down 0.4% from a previously high level.
The North East continued to top the regional yield table at 9.2%, despite a minor quarterly dip of 0.1%.
The North West climbed back to second place with 8.4%, while Yorkshire and Humberside slipped to third at 8.1%.
The West Midlands saw the biggest quarterly gain, with yields up 1.1%, followed by East Anglia which rose 0.4%.
Other regions saw small declines, including the East Midlands (-0.6%) and Wales (-0.5%).
Fleet said yields will remain between 5% and 9% across the country, supported by continued strong tenant demand and limited rental property supply.
The lender also reported that average monthly rent was highest in Greater London at £2,185 – a 6.3% rise over the quarter – followed by the South East at £1,575.
The North East offered the most affordable rents, averaging £739 per month.
On landlord activity, 39% of applications came from those seeking to expand their portfolios – down from 44% in the previous quarter, potentially due to the increased Stamp Duty surcharge.
The proportion of first-time landlord applications rose from 11% to 14%.
Fleet’s data also showed that average loan size increased from £202,000 to £207,000, while average rental cover at loan origination improved from 182% to 190%.
Its 2-year fixed-rate product pricing fell from 4.71% to 4.63%, although 5-year fixed rates ticked up from 5.11% to 5.15%.
Peer group averages for 2-year fixes dropped from 5.33% to 5.16%, while 5-year fixes rose slightly to 5.48%.
Steve Cox, chief commercial officer at Fleet Mortgages, said: “Rental yield levels are showing signs of stabilisation, however they are stabilising at a higher level due to the increases seen across most regions over the course of the last 12 months.
“That remains a real positive for landlords and much can be put down to the continued demand-supply imbalance, the fact rates have been moving downward, and affordability is easier to achieve across the board.
“We of course see regional variations across England and Wales, with a number of regions showing a dip in yields quarter-on-quarter, however as mentioned, this has to be set against the context where yields have shown significant increases over the past 12 to 18 months.”
He added: “One of the interesting aspects of this Barometer is the slight dip we saw in purchase applications through the last three-month period, down from 44% in Q4 2024 to 39% in Q1 this year.
“It is too early to show this as a discernible trend, but we obviously had the increase in Stamp Duty surcharge announced at last year’s Budget, and we will be tracking whether purchase business dips as a result of the increased taxation costs for landlords in buying property.
“That said, activity levels – in terms of both remortgage and purchase – have remained strong, which suggests landlords do want to add to portfolios, and can sense the strong market for them in terms of tenant demand, and what this means for rental levels and ongoing yield/profitability.”
Cox continued: “In terms of product pricing, Fleet continues to outperform our peer group on both 2-year and 5-year fixed-rate pricing, plus we have tracker options as well, which may be popular with those landlord borrowers who anticipate rates may continue to fall over the course of the next year or so.
“Finally, the increase in first-time landlords is also encouraging.
“Even with the Stamp Duty costs, and other barriers to entry in terms of ongoing property costs, increased regulation and legislation like the forthcoming Renters’ Rights Bill, it appears property investment retains its allure as long-term asset to hold.”
