UK Rental Market 2025: Northern and Regional Cities Lead Yield Performance

Overview

The latest buy-to-let data from the UK rental market 2025 shows that Wales and northern England are outperforming London in rental returns.  For those focused on UK property investment for overseas investors, the data signals a compelling case to look beyond the capital.

With lower acquisition costs and rising tenant demand, these locations are generating some of the highest UK property yields in 2025, making them prime targets for diversified portfolios.

Regional Yield Performance

Recent data from Paragon Bank highlights a clear north–south divide in performance, with Wales achieving the UK’s highest average gross yield of 8.84% at the end of Q3 2025. That’s up from 8.59% in the previous quarter and significantly higher than 7.13% in early 2023.

The North East also performed strongly with yields of 8.16%, while both the North West and South West followed closely at 7.81%.

Meanwhile, landlords in Greater London saw the lowest returns, averaging 5.65%, reflecting rising property prices and stricter affordability limits.

This shift confirms the best UK cities for buy-to-let are increasingly found in regional locations, not just London.

Student Accommodation Yields Remain Strong

Student lets continue to be a standout segment in the UK rental market 2025.

Properties in student postcodes delivered an average yield of 7.31%, outperforming the 6.65% seen in non-student locations.

Similarly, HMO (House in Multiple Occupation) properties — often student rentals — achieved yields of 8.48%, reflecting both strong occupancy and sustained demand from the academic sector.

“Student accommodation continues to deliver higher yields and dependable income, despite broader uncertainty in higher education funding.”
says Louisa Sedgwick, Managing Director of Mortgages at Paragon Bank.

These numbers confirm that student rentals remain one of the high-yield UK property opportunities worth considering in 2025.

Key Insight for Overseas Investors

For international investors targeting UK property investment, these figures reinforce one clear strategy: Look beyond London.

Regions such as Cardiff, Manchester, Leeds, and Newcastle offer lower entry prices, strong rental demand, and better cash flow potential — critical advantages when managing foreign exchange exposure and portfolio diversification.

With yields in many areas exceeding 7%, regional property investment in the UK presents an ideal balance of cash flow and future appreciation.

Why Regional UK Markets Are Rising

• Lower entry prices  enhance gross yield margins
• Strong rental demand  from students and young professionals keeps occupancy rates high
• Ongoing infrastructure investment  (e.g. HS2, urban regeneration) supports long-term growth
  
  

Whether you're looking at Wales property investment or northern city hotspots, these factors position regional markets as the best UK cities for buy-to-let investors seeking dependable returns in 2025.

Magnate Assets Insight

At Magnate Assets, we’re seeing significant movement among international clients looking to capitalise on these high-yield regional opportunities.

Our current pipeline includes:

• New-build student accommodation investments  in major Welsh and northern university towns
• Serviced apartments near key business and transport corridors
• Fully managed buy-to-let investments with projected UK property yields 2025 of 7–9%

For overseas investors aiming to access UK property investment opportunities with strong income potential and hands-free management, now is an ideal time to act.