Landlords are achieving higher yields, although mortgage affordability has tightened and purchases account for a smaller share of borrowing.
Fleet Mortgages’ latest quarterly barometer puts average yields across England and Wales at 7.9% in Q3 2026, up from 7.5% a year earlier.
However, average rent cover at origination dropped from 144% to 132%, indicating pressure from higher funding costs and mortgage rates.
Purchases accounted for 34% of Fleet’s business, down from 36% in the previous quarter but still above the 33% recorded in Q1.
Landlord borrowing pressures
Steve Cox, chief commercial officer at Fleet Mortgages, said: “Q3 has been another quarter in which advisers and their landlord clients have had to deal with considerable uncertainty, particularly as geopolitical developments have continued to feed through into energy prices, inflation expectations, swap rates and ultimately mortgage pricing.
“It is therefore not surprising to see purchase activity ease slightly during the quarter, or rental cover come under further pressure, but we should be careful about interpreting either of those movements as landlords stepping away from buy to let.”
He added: “In fact, some of the other figures point very strongly in the opposite direction.
“The average Fleet landlord now owns 18 investment properties compared with 12 a year ago, almost a third of our applications are coming from landlords with 15 or more properties, and two-thirds are from those owning at least four.”
Larger landlord portfolios
The average portfolio among Fleet borrowers had stood at 16 properties in Q2, before reaching 18 in the latest quarter.
Landlords owning at least 15 buy to let homes accounted for 30% of applications, compared with 26% in Q2 and 23% 12 months before.
Meanwhile, the share from landlords with between one and three homes fell from 29% to 24%, although applications from first-time landlords rose to 10% from 9%.
Limited companies accounted for 71% of applications, down from 78% in the previous quarter.
Regional rent yields
Yorkshire and Humberside overtook the North East to record the highest average yield at 9.3%, compared with 8.2% 12 months ago and 8.7% in Q2.
The North East followed at 9.2%, and the only two of the 10 regions to record an annual decline were the North West and Wales.
Greater London had the lowest yield at 6.4%, despite commanding the highest average monthly rent of £2,597, nearly 10% more than in Q2.
At £792, the North East’s average monthly rent was the lowest and had fallen by just over 6% since the previous barometer.
New landlords enter market
Mr Cox went on to say: “We should also recognise that financial market volatility is not the only change landlords are dealing with.
“The first phase of the Renters’ Rights Act is now embedded, and the next stage of implementation will begin with the rollout of the property registration service in the West Midlands from the 15th December before moving across England during 2027.”
He added: “What remains encouraging is that, despite everything the sector has dealt with during 2026, experienced landlords are continuing to invest and new landlords are still entering the market.
“Conditions may continue to move, but our Q3 figures suggest the longer-term commitment of professional landlords to the private rental sector remains strong.”
Landlords are investing
The managing director of Accommodation for Students, Simon Thompson, said: “There’s some good news from Fleet in that higher yields offer welcome income, but rising borrowing costs could squeeze a landlord’s profits.
“Larger portfolios among Fleet borrowers suggest experienced landlords still see opportunities worth pursuing, and that should inspire more landlords to consider the same.”
He added: “However, before expanding, landlords should compare their future mortgage payments against the expected rent rather than looking at the headline returns alone.
“It’s also worth noting from the data that regional differences in yields also warrant careful attention when choosing where to invest.”
