Revealed: The best UK regions for buy-to-let landlords

Becoming a buy-to-let landlord has grown increasingly difficult in recent years as rental yield growth has slowed but house prices have increased.

The average price of a house in December 2025 was £297,755, according to Halifax, an increase of just 0.3% compared to last year.

While seeing house prices increase may be good news for homeowners as their assets are increasing in value, it does mean becoming a buy-to-let landlord has become more expensive.

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At the same time, new government measures are set to take bigger chunks out of rental profits.

Under current rules, rental income is taxed at the same rate as income from employment. But in the 2025 Autumn Budget, chancellor Rachel Reeves announced the government will increase tax on income from property from the 2027/28 tax year.

Rental income will be taxed at 22% for those on the basic rate of income tax, 42% for those on the higher rate, and 47% for those on the additional rate from 2027/28 onwards.

The new Renters' Rights Act, which has now become law, could provide further challenges for landlords.

However, despite headwinds in the market and a future increased tax burden, there are still some places in the UK where buy-to-let landlords could get strong rental yields. We look at the UK’s buy-to-let hotspots.

What are rental yields?

A rental yield measures how much profit a landlord can expect to make from their rental property each year. It is expressed as a percentage of rental income against the property’s market value.

For example, if you earn £10,000 a year from renting out a property worth £100,000, your rental yield would be 10%.

However, rental yield does not take into account any costs associated with letting a property, such as mortgage payments or insurance, and neither does it account for periods when the property is unoccupied and not producing any rental income.

Nevertheless, it is a good way for landlords to compare how different rental properties are likely to perform and can help them work out if renting out a property is worth it.

Where is the top UK region for buy-to-let?

The best UK region to be a buy-to-let landlord is Wales, according to new data from Paragon Bank.

Rental yields in the country were 8.83% in the fourth quarter of 2025, up 0.74 percentage points when compared to the same period in 2024, making the strongest annual rental yield growth of any UK region.

The average price of a house in Wales was £230,233 in December 2025, according to Halifax, below the UK average.

The second-best region in the UK for rental yields was the North East where landlords obtained an average yield of 8.2% in the final quarter of 2025 (up 0.38 percentage points compared to 2024).

Houses in the region cost an average of £181,798, well below the UK average according to Halifax.

While rental yields grew slower in the region than in Wales, the North East saw the fastest annual house price growth in the UK, with prices increasing by 3.5% in the 12 months to December 2024.

The third-best rental yields in the UK can be found in the North West, where the average landlord saw a yield of 7.8% in Q4 2025, though this is down 0.05 percentage points since Q4 2024. Houses in the region cost an average of £245,323, according to Halifax.

Meanwhile, the worst region in the UK for buy-to-let landlords in the final quarter of 2025 was Greater London, where average yields were 5.78%, more than three full percentage points lower than in Wales.

Yields in the capital are up 0.3 percentage points since Q4 2024, while the average house there costs an average of £539,086 according to Halifax, well above the UK average.

Louisa Sedgwick, managing director of mortgages at Paragon Bank, said: “Yields have performed strongly since summer 2022, when house price growth began to slow and rental inflation accelerated due to the imbalance between supply and demand.

“While we saw this momentum ease last year as the market normalised, we expect yields to remain stable throughout this year.

“Although overall yield growth was relatively flat in 2025, certain property types and regions stood out, reflecting varied local market conditions and shifting demand for specific kinds of homes.”

A map showing the UK’s buy-to-let hotspots can be found below.

What type of property is most profitable for buy-to-let?

The most profitable type of buy-to-let property was the house in multiple occupation (HMO), according to Paragon Bank's latest data.

An HMO is a type of property where multiple households live in the same building and share amenities like kitchens or toilets.

The average yield for an HMO landlord was 8.61% in the final quarter of 2025, up 0.2 percentage points since the same time last year.

The reason HMOs and freehold blocks yield so much is because multiple streams of rent can be produced from what used to be one single property, allowing landlords to earn more from the same investment. This can especially be the case when providing student housing.

The second-most profitable type of property for a buy-to-let landlord in Q4 2025 was the multi-use block (MUB).

An MUB is a single property that contains multiple self-contained residential units. Unlike an HMO, households in an MUB will not share amenities.

The average rental yield for an MUB was 7.32% in Q4 2025, up just 0.02 percentage points on the year.

The average rental yield for a flat was 6.33% in Q4 2025 (up 0.24 percentage points on the year), while terraced houses saw a yield of 6.28% (up 0.23 percentage points).

Meanwhile, the worst type of rental property for yields in the final quarter of 2025 was the detached house.

Rental yields on the average detached house were just 4.54%, just over half that of an HMO. Yields also fell by 0.07 percentage points on the year.

Source: Paragon Bank, January 2026