The best and worst UK regions for buy-to-let landlords

Life as a landlord isn’t getting any easier as new legislation is set to tax landlords more while renters have been given stronger rights – but it is at least slightly more profitable for the typical landlord than last year.

The average rental yield – the return landlords get before costs, expressed as a percentage of the property’s value – in the UK was 7.21% in the first three months of 2026, according to data from trade body UK Finance.

That figure is an increase from 6.93% at the same time in 2025, and up marginally from 7.18% in the previous quarter.

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The uptick reflects how rental premiums have outpaced house price growth, which has remained subdued in part due to higher mortgage rates.

The average UK property price rose by 2.7% in the 12 months to May 2026 to £271,000, according to the latest data from the Office for National Statistics (ONS).

Meanwhile, UK monthly private rents increased by 3.3% to £1,388 on average, over the same 12 month period.

Louisa Sedgwick, managing director of mortgages at Paragon Bank, said: “Although buy-to-let lending moderated from the stronger levels seen at the end of 2025, activity in the first quarter remained ahead of the same period last year, indicating that the market continues to move in the right direction where conditions are supportive.”

Increasing rental yield means landlords are getting slightly more money from their properties than a year ago, but the figures do not show how much of this yield they keep after accounting for costs.

Those costs are set to increase. Tax on property income will rise by two percentage points from April 6, 2027.

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.

Meanwhile, the new Renters’ Rights Act has now come into force, strengthening the rights of tenants and potentially creating new challenges for some landlords.

Despite headwinds in the market and an increased tax burden looming, landlords will be buoyed by rising rental yields – but some regions are far more lucrative than others.

What are rental yields?

A rental yield measures how much profit a landlord can expect to make from their rental property each year and is used to work out whether a property is a good investment or not.

Rental yield is usually 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%.

Rental yields are usually broken down into gross and net yield. The gross figure does not take into account any costs, like mortgage payments or insurance, or time when the property is unoccupied. Net rental yield does factor in these costs.

The Mortgage Works, the buy-to-let lender of Nationwide Building Society, has a calculator you can use to work out the rental yield of a property.

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

The region with the highest gross rental yield in 2025 was the North East of England, where the average landlord achieved a gross yield of 8.6%, according to UK Finance.

Scotland was the region with the second highest overall gross rental yield in 2025 (8.5%), while the third-best region was tied between the North West and Wales (7.7%).

Credit: UK Finance (May 2026)

The worst-performing region for rental yield was Greater London, lagging behind the rest of the country at just 6%.

Where are the buy-to-let hotspots?

Although the North East was the best performing region for rental yield overall in 2025, all top 10 local authorities where rental yields were highest were in Scotland, UK Finance found.

Renfrewshire and West Dunbartonshire, which both neighbour Glasgow, tied in first place as the local authorities with the highest rental yield in the UK as landlords achieved an average of 9.9%.

North Lanarkshire, Aberdeen City and East Ayrshire all tied in second place with average yields of 9.6%.

Meanwhile, the worst areas for buy-to-let landlords were mostly in the South of England, where average house prices are generally higher, which can affect landlords’ returns.

South Hams in Devon had the worst rental yield in 2025 of just 5%, closely followed by Kensington and Chelsea with 5.1%.

Credit: UK Finance (May 2026)