Rental yield in England and Wales came in at 7.4% in the first three months of the year, unchanged from the previous quarter and up 3 basis points from a year ago, data from Fleet Mortgages shows.  

Year-on-year yields remained positive, with once again only one region, Yorkshire & Humberside, showing a 0.4% dip, according to the lender’s latest Buy-to-Let Rental Barometer. 

However, compared to the previous quarter, several regions have turned in slightly reduced yields — the North East was down by 0.1%, the South West down by 0.2%, both Wales and Yorkshire & Humberside were down by 0.5% and the East Midlands down by 0.6%. 

Even with the slight quarterly dip of 0.1%, the North East continues to lead other regions with a 9.2% yield, the North West moved into second place with 8.4%, while Yorkshire & Humberside has slipped one place to third with 8.1%. 

The big climber was the West Midlands which saw a quarter-on-quarter increase of 1.1%, the next biggest mover was East Anglia, which rose 0.4% over the quarter. 

The survey says: “Rental yield levels have begun to stabilise in recent months from the larger increases that were seen throughout 2024.”  

However, it anticipates levels are likely to remain between 5% to 9% across the various regions, “not least due to the continued strong tenant demand set against the relative lack of property supply available to them”. 

It points out that the highest average monthly rent per property was in Greater London at £2,185 – a quarterly increase of 6.3% –followed by the South East at £1,575.  

Properties in the North East typically contain the most affordable rental stock, with an average monthly rent of £739. 

The report continues to observe high demand from landlords looking to add properties to their rental portfolios, at 39%, although this has dipped slightly from 44% the previous quarter. 

It adds this, “might be due to the increase in the stamp duty surcharge, which was increased to 5% from 3% by the government last year”. 

Fleet says the average number of homes held in a portfolio is nine, with over 55% of applications received during the quarter from landlords holding four or more rental properties.  

But the lender adds there has been an increase in applications from first-time landlords, up from 11% in the last three months of 2024, to 14% in the first quarter of this year. 

Fleet Mortgages chief commercial officer Steve Cox says: “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 the final quarter of 2024 to 39% in the first quarter of 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. 

Cox adds: “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 a long-term asset to hold.”