Editor's note: This brief was summarised by The Property AI Newsroom from a report by PropertyWire. Read the original article for full details.
North-South Rental Yield Gap Narrows in Q2 2026
The gap between rental yields in northern and southern England narrowed during the second quarter of 2026, according to Fleet Mortgages’ latest Rental Barometer. Average rental yields across England and Wales increased by 0.3 percentage points year-on-year to 7.8% in Q2, though this was a decrease from 8.1% in the first quarter of 2026.
The North East continued to offer the highest average rental yield at 9.2%, despite a 0.6 percentage point drop compared to the previous quarter. Yorkshire and Humberside also saw yields decline by 0.3 percentage points, while the West Midlands experienced a 0.6 percentage point decrease. In contrast, Greater London yields rose from 6.1% to 6.3% during the quarter, and the South East remained stable at 6.9%.
The data indicates that while the traditional North-South divide in rental yields persists, it is becoming less pronounced as yields in high-performing northern regions begin to plateau.
Buy-to-Let Activity and Mortgage Market Trends
Fleet Mortgages reported increased activity in the buy-to-let sector, with purchase business rising from 33% of mortgage applications in Q1 to 36% in Q2. Portfolio landlords with four or more properties accounted for more than 62% of applications, and limited company borrowing represented 78% of all applications.
The mortgage market experienced volatility early in the quarter due to financial market responses to conflict in Iran and rising swap rates. Conditions improved later in the period, allowing lenders to reduce mortgage rates and reintroduce previously withdrawn products.
The findings come as the rental sector faces demographic shifts and ongoing challenges with property transaction times. The data suggests that professional landlords continue to invest in areas where they see long-term value, with the narrowing yield gap potentially broadening the geographic scope for investment opportunities beyond traditional high-yield northern markets.
Source: PropertyWire