The total average rental yield in England and Wales rose to 7.6% in the second quarter, according to new figures published by Fleet Mortgages.

This was up by 1% on the same quarter in 2023 as well as by 0.5% on the Q1 figure this year.

Fleet published the findings in its latest Buy-to-Let (BTL) Rental Barometer, which covers all areas of England and Wales in which Fleet lends and highlights the rental yield changes that have occurred in each region.

The BTL lender suggested that strengthening yields across every region in England and Wales was “evident” in Q2, with all showing year-on-year increases, and in particular the North East achieving a double-digit yield.

Yorkshire and Humberside, which previously held the top spot for rental yields in Fleet’s data, fell to fifth place with an average yield of 7.6%, down from 8.5% last quarter. The North East has now moved into the top spot, in front of the North West, while both Wales and the West Midlands also jumped ahead of Yorkshire and Humberside.

When it comes to average monthly rent per property, the highest is generated within Greater London at £2,024, followed by East Anglia at £1,594. By comparison, properties located in the North East region are typically seeing the most affordable rents, with an average monthly pricing of £768.

Chief commercial officer at Fleet Mortgages, Steve Cox, commented: “The requirements for an ongoing strong yield are clearly not going away, particularly in a higher interest rate environment in which many refinancing landlord borrowers are having to pay far more for their monthly mortgages than they did two, three, and five years ago.

“When it comes to mortgage pricing, it showed a clear increase in Q2, however with inflation now down to target, once we have the General Election out of the way, we would anticipate a base rate cut in either August or September, and swap rates will move to reflect further cuts in the not so near future.”

Fleet’s analysis also revealed an increase in property purchase business in Q2, with 42% of all applications for these transactions, compared to the longer-term quarterly trend of 30%. The lender also found that four in five (80%) Q2 applications were for limited companies and just 20% for private investors.

“It won’t be surprising to see limited company borrowers continuing to dominate, given the tax relief that can still be secured within a corporate structure,” Cox added. “That is a trend that will continue for many years to come.

“Overall, these latest figures are positive, and they signal further activity in the second half of the year, particularly if – as we are already seeing – pricing continues to move down.”

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