Regional hotspots where landlords are seeing the best yields in 2025

In a market where regulatory change, rising costs, and fluctuating demand dominate the headlines, landlords are rightly focused on one of the most fundamental metrics in buy-to-let: yield. The gross yield (or rental income as a proportion of property value) remains the most widely used measure when evaluating the health of a portfolio. As we move through 2025, regional disparities have become more pronounced, with some areas delivering double the returns of others.

With over two decades of market cycles shaping the private rented sector, it is clear that yield analysis has never been more important. Investors who focus solely on capital growth without considering income risk being squeezed, while those who overlook tenant demand in pursuit of headline yields may face higher voids and management challenges. The key is balance, identifying regional hotspots where yield, demand, and long-term fundamentals align.

This article explores the regions with top yields of 2025, the factors driving performance, and the outlook for landlords considering new acquisitions or reviewing their portfolios. After you have read this piece, check out the numbers before you commit using our Rental Yield Calculator.

Understanding the yield picture in 2025

Before diving into the regional data, it is worth reflecting on the context shaping yields this year. Mortgage rates remain higher than many landlords were accustomed to during the 2010s. While the Bank of England base rate is expected to soften slightly, average buy-to-let mortgage rates in early 2025 are still around 5–5.5%. This puts pressure on net yields, particularly in London and the South East, where property values are highest.

At the same time, tenant demand has never been stronger. The Renters’ Reform Bill may still be making its way through Parliament, but the uncertainty has not dampened the appetite of households to rent. A combination of affordability constraints for first-time buyers, a shortage of new housing supply, and lifestyle-driven demand for flexibility means rental markets remain buoyant. According to Zoopla, demand continues to outstrip supply in nearly every major city, driving rents upward by 6–7% year-on-year in many regions.

The result is a polarised picture. Markets with relatively low entry prices and robust demand are generating exceptional yields, while high-value regions with weaker rental growth are lagging.

The North East is consistently top of the table

For several years now, the North East has dominated yield tables, and 2025 is no exception. Cities such as Sunderland, Middlesbrough, and Newcastle consistently offer gross yields in the 8–9% range, with some postcodes exceeding 10%.

Property prices remain among the lowest in the UK, with average values still under £150,000 in many areas. Combined with steady rental demand from both local workers and students, this creates a favourable yield environment.

That said, landlords must be selective. While yields look attractive on paper, some areas suffer from higher tenant turnover and maintenance costs. Investors with strong local property management, or those working with local estate agents on tenant vetting, are best placed to capture the upside without being caught by hidden voids.

Scotland has strong yields but evolving regulation

Scotland has long offered a compelling yield story, particularly in Glasgow and Dundee, where gross yields of 7–8% are common. Edinburgh, while more expensive, still delivers better yields than many southern English cities.

In 2025, landlords are also contending with Scotland’s distinct regulatory framework. The government’s rent control measures, while capped at 6% increases in many cases, have not eliminated profitability, but they have altered the calculus for landlords focused purely on yield. Many investors continue to buy in student-heavy markets, where tenant demand remains resilient and voids minimal.

For those prepared to adapt to the regulatory environment, Scotland remains one of the strongest regions for income performance.

The North West transformation of Manchester and Liverpool

Few regions illustrate the transformation of rental markets better than the North West. Manchester and Liverpool have become international investment hotspots, with billions poured into regeneration, infrastructure, and city-centre living.

Gross yields in parts of Liverpool still reach 8–9%, especially in the L1 and L6 postcodes, though capital appreciation has been more modest compared with southern cities. Manchester offers slightly lower yields, typically 6–7%, but with stronger long-term capital growth prospects, particularly around the city centre and Salford Quays.

One of the defining features of the North West is tenant demand diversity. From professionals and students to families and overseas tenants, landlords benefit from a broad base of renters, making voids less of a concern than in smaller, single-industry towns.

Wales see affordability driving returns

Wales, and particularly Cardiff, Swansea, and Newport, continues to attract investors seeking affordable entry points with solid yields. Average gross yields hover around 6–7%, but in certain valleys and coastal towns, figures north of 8% are achievable.

The country’s affordability makes it appealing to tenants leaving more expensive English markets. Cardiff’s student population provides a steady rental pipeline, while the ongoing electrification of rail routes into England has improved commuter potential.

Regulatory shifts, including licensing requirements under Rent Smart Wales, remain a factor, but landlords who comply find the market supportive.

The Midlands balances yield with growth

Birmingham, Nottingham, and Leicester stand out as strong Midlands performers in 2025. Gross yields in Birmingham typically sit at 6–7%, with demand bolstered by a growing professional base and infrastructure projects such as HS2 (albeit truncated).

Nottingham, home to two large universities, offers yields closer to 7–8%, with consistent student demand underpinning rents. Leicester has emerged as a quieter success story, with affordable property values supporting yields above 7%.

The Midlands often delivers the balance that landlords seek by having above-average yields combined with realistic capital growth prospects.

London and the South East have strong fundamentals but lower yields

It would be misleading to suggest that yields in London and the South East compete with northern or Scottish cities. Gross yields in many London boroughs remain around 3–4%, with outer boroughs occasionally delivering 5%. The South East tells a similar story, with towns such as Reading, Oxford, and Brighton offering limited yield upside due to high entry prices.

Yet London remains the UK’s most liquid rental market. Tenant demand is extraordinarily high, and rental growth has been robust, particularly in Zones 3–6, where affordability relative to central London is driving migration. For landlords focused on long-term capital growth and market stability, London still has a role to play, even if yields alone do not tell the full story.

Emerging hotspots to watch

Beyond the headline regions, a few emerging areas are worth monitoring in 2025. Hull, with ongoing regeneration and low entry costs, has seen yields climb to 8%. Belfast has also become increasingly attractive, with yields above 7% and steady tenant demand. Meanwhile, smaller commuter towns across the North West and Midlands, particularly those benefiting from improved transport links, are quietly outperforming.

Yield is not the only story

While gross yields make good headlines, experienced landlords know that net yield, after mortgage costs, maintenance, voids, and tax, is what matters. A region delivering 9% gross yield, but with high turnover and poor tenant quality may underperform a 6% gross yield in a stable, well-managed market.

Equally, long-term capital growth can transform the economics of a portfolio. The North East may deliver the highest yields today, but price appreciation has historically lagged behind southern England. Landlords must weigh whether income today outweighs potential capital uplift tomorrow.

Tax considerations also shape the picture. Section 24 restrictions on mortgage interest relief continue to squeeze highly leveraged landlords. Those investing via limited companies may find higher-yielding regions more forgiving, while those holding personally may prefer the capital growth focus of the South East.

Practical advice for landlords in 2025

For landlords reviewing their strategy this year, three principles stand out.

First, be data-led but pragmatic. Yields provide an excellent starting point, but due diligence on local demand, tenant demographics, and property condition is essential.

Second, factor in regulation. Scotland’s rent controls, Wales’s licensing, and England’s shifting compliance rules all add complexity. The most profitable landlords are those who integrate compliance into their management systems rather than treating it as an afterthought. That’s why we built it into our property management app August.

Third, think long-term. The best portfolios blend high-yielding stock with stable, lower-yield assets that offer capital growth and liquidity. A diversified geographic approach mitigates risks tied to regional economic shifts.

Conclusion

In 2025, the UK’s regional yield map remains as varied as ever. The North East and parts of Scotland top the tables, offering gross yields above 8%. The North West and Midlands deliver a balance of yield and growth, while Wales continues to provide affordable entry points with respectable returns. London and the South East lag on yield but remain essential for those seeking capital growth and market depth.

For landlords, the opportunity lies not in chasing the highest yield alone, but in matching regional performance to their own goals and risk appetite. With demand resilient and supply constrained, well-managed properties in the right locations remain a sound investment.

Ultimately, success in 2025 will depend on combining regional insight with operational excellence. Landlords who monitor the data carefully, manage compliance effectively, and prioritise tenant relationships will be best placed to thrive. A yield figure on a spreadsheet is only meaningful when underpinned by reliable tenants, consistent rent collection, and a well-run property. Those who strike this balance will secure both strong returns and long-term stability in an evolving market.

Disclaimer: This article is a guide and not intended to be relied upon as legal or professional advice, or as a substitute for it. August does not accept any liability for any errors, omissions or misstatements contained in this article. Always speak to a suitably qualified professional if you require specific advice or information.