New data shows steady rental yield growth and rising interest from both seasoned and first-time landlords
The average rental yield across England and Wales reached 7.4% in the fourth quarter of 2024, marking a 0.6% annual increase and a 0.2% rise from the previous quarter, according to Fleet Mortgages’ latest Buy-to-Let Rental Barometer.
The report highlights regional rental yield trends across the areas where the buy-to-let lender operates, comparing Q4 2023 to Q4 2024. Fleet noted that yields remain predominantly positive, with the West Midlands being the only region to experience a year-on-year decline. On a quarterly basis, yields fell slightly in Greater London, the North East, and the West Midlands.
The North East continues to lead with the highest average rental yield at 9.3%, followed by Yorkshire and Humberside at 8.6%, and the North West at 8.3%. Wales also improved, posting an 8.2% yield after a 0.5% annual increase. The East Midlands showed the strongest annual growth at 1.2%, though quarterly growth slowed to 0.2%.
Fleet Mortgages also noted that rental yields across England and Wales were broadly stable compared to the previous year. Falling mortgage rates over the past 12 to 18 months, combined with resilient rental yields, continue to make buy-to-let investment attractive for both seasoned and new landlords.
Applications from landlords with six to 14 properties grew from 30% in Q3 to 34% in Q4. First-time landlord applications also increased, rising from 10% to 11% during the same period.
Greater London recorded the highest average monthly rent at £2,056, followed by the South West at £1,734. The North East remained the most affordable region, with an average rent of £706.
The Q4 2024 Rental Barometer also showed a decline in Fleet Mortgages’ product pricing. Its average two-year fixed rate at 75% LTV fell from 5.02% in Q3 to 4.71% in Q4, while its five-year fixed rate dropped from 5.24% to 5.11%. The lender expects rates to continue declining in 2025.
Fleet’s average loan size increased from £196,000 in Q3 to just under £202,000 in Q4. Rental cover at loan origination also improved, rising from 176% to 182%, reflecting higher monthly rents and affordability.
Applications for property purchases increased slightly, from 43% to 44% quarter-over-quarter, with limited company borrowers accounting for 79% of all applications – up from 77% in Q3. Meanwhile, private investor applications declined from 23% to 21%.
“There is certainly a greater degree of positivity around the buy-to-let market now than at this time last year, even with the Budget decision to increase stamp duty surcharges for landlord purchasers,” said Steve Cox (pictured), chief commercial officer at Fleet Mortgages.
“Our Rental Barometer reflects that optimism over the last quarter of 2024, with average rental yields continuing to improve, albeit at a slightly slower rate. The financial position is positive, which will allow more landlords to act and expand their portfolios where appropriate.”
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