The average number of investment properties owned by landlords has increased from 16 to 18 quarter-on-quarter in Q3, as the average annual rental yields across England and Wales rose to 7.9%, Fleet Mortgages has revealed.

The Fleet Mortgages Quarterly Rental Barometer showed that average rental yields increased by 0.4% year-on-year, from 7.5% to 7.9%, with the regional picture being “broadly positive”, with only two of the 10 regions covered by Fleet, the North West and Wales, recording a fall in average yields year-on-year.

Quarter-on-quarter, only East Anglia, the North West and Wales experienced a decline, while the North East remained unchanged at 9.2%.

Yorkshire and Humberside moved to the top of the regional yield table during Q3, increasing from 8.2% a year ago and 8.7% last quarter to 9.3%. The North East was second to 9.2%, while the North West, East Midlands and West Midlands all continued to deliver average yields above 8%.

Greater London also remained the lowest-yielding region at 6.4%, although it continued to command the highest average monthly rent at £2,597, up almost 10% quarter-on-quarter.

Fleet also revealed that the average number of investment properties owned by Fleet borrowers increased year-on-year from 12 to 18 properties. Landlords with 15 or more buy-to-let properties accounted for 30% of applications during the quarter, up from 26% in Q2 and 23% a year ago, while 66% of applications came from landlords owning four or more properties.

At the same time, the proportion of applications from landlords with between one and three properties fell from 29% to 24% quarter-on-quarter, while first-time landlord applications increased from 9% to 10%.

Chief commercial officer at Fleet Mortgages, Steve Cox, said Q3 has been another quarter in which advisers and their landlord clients have had to deal with “considerable uncertainty”.

He concluded: "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.

"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.

"That suggests professional landlords continue to grow their portfolios where the right opportunities present themselves, even if market conditions influence precisely when they decide to purchase or refinance. 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."

---