Rental yields remain the cornerstone of a healthy buy-to-let investment strategy—but in 2025, they’re far from uniform across the UK.
As mortgage rates continue to cool and tenant demand intensifies in certain regions, landlords are discovering a tale of two property markets: rising returns in the north, and shrinking yields in the overheated south.
New figures from Rightmove and Zoopla show that regional differences in rental performance are wider than ever, with many traditional hotspots under pressure from affordability ceilings and legislative risk. So where should savvy investors be looking?
Top 5 cities with rising yields in 2025
| City/Region | Avg Yield (2024) | Avg Yield (2025) | Annual Change |
| Sunderland | 6.3% | 6.9% | +0.6% |
| Nottingham | 5.7% | 6.2% | +0.5% |
| Leeds | 5.4% | 6.0% | +0.6% |
| Aberdeen | 5.0% | 5.6% | +0.6% |
| Bradford | 5.2% | 5.7% | +0.5% |
These gains are fuelled by a combination of low entry prices, robust tenant demand (especially from students and young professionals), and stable rental values.
Notably, university cities and towns with active regeneration projects are outperforming, as affordability concerns steer tenants away from London and the South East.
Where yields are declining
On the flip side, parts of London, Surrey, and the South East are seeing a softening in yields—driven by:
- Soaring property prices outpacing rental growth
- A rise in unletted high-end stock
- Greater legislative risk (e.g. stricter local licensing, EPC enforcement)
- Higher churn in the face of upcoming tax hikes
| Area | Avg Yield (2024) | Avg Yield (2025) | Annual Change |
| Kensington, London | 3.2% | 2.8% | -0.4% |
| Guildford | 3.9% | 3.5% | -0.4% |
| Tunbridge Wells | 4.1% | 3.6% | -0.5% |
Investors in these areas may see stronger capital growth long-term, but monthly returns are under pressure, particularly for geared landlords facing tighter margins.
What’s driving yield shifts?
- Affordability caps: Many tenants are now maxed out on rent, especially in high-cost commuter towns.
- Changing tenant habits: Remote and hybrid workers are spreading to new towns and cities.
- Mortgage market volatility: Some landlords are exiting, creating local supply gaps that push up rents.
- Regulatory fears: Landlords are pricing in risks like EPC upgrades, rent caps, and local licensing.
How to find yield hotspots before they peak
- Look at price growth vs. rental growth: Yields rise fastest where property values are stable, but rents are climbing.
- Track void periods: High yields mean little if properties sit empty. Use tools like Lendlord or PropertyData to monitor vacancy trends.
- Monitor council planning and regeneration news: Places undergoing transformation often outperform once infrastructure and amenities improve.
- Talk to local agents: On-the-ground insights can often reveal up-and-coming neighbourhoods before the data catches up.
Final takeaway
In 2025, rental yields are becoming increasingly postcode-specific. Rather than chasing past performance, smart investors are using granular data to identify undervalued areas, underserved tenant groups, and emerging corridors of growth.
A well-timed investment in the right place could mean the difference between a 2.8% yield and a 6.9% return.
