Landlords in parts of the UK are facing pressure on returns as new figures show some regions and local markets have delivered consistently low yields over the past three years.
Analysis from specialist lender Octane Capital found that while the average rental yield across Great Britain has stood at 5.7% since 2023, certain areas have underperformed significantly.
At a regional level, Scotland recorded the strongest three-year average yield at 6.2%, followed by the North East at 5.2% and the North West at 5%. By contrast, the South East saw the weakest returns at 4.1%, with the East of England and East Midlands both at 4.2%, and the West Midlands at 4.4%. London averaged 4.5% despite more recent rental growth.
A closer look at individual local authorities revealed the starkest gaps. Kensington and Chelsea was identified as the weakest performer nationwide, with average yields of just 2.8% over the past three years. Other areas falling below 3.1% included:
Richmond upon Thames (3.0%)
Elmbridge, Surrey (3.0%)
Waverley, Surrey (3.0%)
Derbyshire Dales (2.7%)
Powys, Wales (2.9%)
South Hams, South West (2.9%)
North Norfolk (3.1%)
Rutland (3.1%)
Uttlesford, East of England (3.1%)
Jonathan Samuels, CEO of Octane Capital, explained: “Our latest research highlights the difficult reality for landlords in low-yielding parts of the market, where properties may no longer fit within ICR requirements as they approach the end of their current mortgage terms.
“For many, the result is limited refinancing options from mainstream lenders, and this is where specialist finance plays a vital role.
“Bridging and short-term lending can provide the flexibility needed to manage the transition, whether that means restructuring, selling, or re-investing into stronger performing assets. At Octane Capital, we are continuing to support landlords with fast, tailored solutions that help them navigate today’s more challenging buy-to-let landscape and low-yielding investments often form a key part of this activity.”
