Average rents hit £1,284 in England as supply falls short
Rightmove’s January 2026 rental tracker put the average advertised rent in England at £1,284 per calendar month, up 4.1% year on year. Scotland averaged £1,043, a 5.8% rise, and Wales reached £956, up 3.9%. The headline growth masks a shrinking pipeline: landlord instructions to letting agents are down roughly 7% annually, and the number of available rental properties per branch remains about 20% below the 2019 average.
The supply-demand imbalance is the single biggest driver of rental growth. Zoopla’s early 2026 data shows the average rental property attracts around 12 enquiries, with some northern postcodes hitting 20. Build-to-rent completions have added stock, but not enough to offset private landlord exits. Renters are staying put longer, reducing churn and pushing up renewal rents.
Where yields are rising in 2026
Gross yields are strongest in the North West, Yorkshire and the Humber, and the West Midlands. Manchester postcodes like M14 and M18 are delivering gross yields of 7% to 8.2% on terraced stock, with average rents around £1,150. Liverpool’s L6 and L7 wards show 8.5% to 9.1% yields, though capital growth has been flat. Leeds (LS4, LS6) yields 6.8% to 7.4%, supported by a student and young professional tenant base.
Sheffield, Nottingham, and Stoke-on-Trent remain the yield leaders outside London, with gross returns of 7.5% to 9%. In these markets, the maths works because entry prices are low relative to rents, and void periods remain short. Local housing allowance freezes have pushed some benefit-dependent tenants into the private rented sector, tightening the lower end of the market further.
Stalling yields in London and the South East
Greater London gross yields sit at 3.6% to 4.2%, with prime central London below 3%. Average rents in London reached £2,694 in January 2026, up 2.8% year on year, but affordability constraints are biting. The ratio of rent to average earnings in London now exceeds 40% in several boroughs. Southampton, Brighton, and Bristol show yields of 4.5% to 5.2%, with rent growth slowing as tenant demand cools at the top of the market.
Section 24 mortgage interest relief restrictions, the 3% stamp duty surcharge, and the phasing out of Section 21 no-fault evictions under the Renters’ Rights Bill continue to push smaller landlords out of southern markets. The proportion of landlords planning to sell at least one property rose to 32% in NRLA’s Q4 2025 survey, with the South East and South West showing the highest exit intent.
What the supply squeeze means for buy-to-let
Fewer landlords chasing the same tenants means rents rise faster than wages in the short term. The Office for Budget Responsibility expects rental growth to average 3.5% annually to 2028, though regional variation will be wide. For investors, the play is not simply chasing the highest gross yield. Net yield after mortgage costs, service charges, and maintenance is what matters. In Manchester, a 7.8% gross yield can net around 4.5% after a 75% loan-to-value mortgage at 5.2% and typical costs.
EPC C-rated minimums for new tenancies under the proposed Future Homes Standard will force capital expenditure on older stock. Landlords with EPC D or E properties in low-yield southern markets face a binary choice: spend £8,000 to £12,000 on insulation and heating, or sell. That calculation is driving the current exit wave. If you are auditing a portfolio, property inventory software can help you track condition, compliance dates, and upgrade costs property by property rather than relying on spreadsheets.
Renters’ Rights Bill and tenant demand
The Renters’ Rights Bill, expected to receive Royal Assent in 2026, abolishes Section 21 evictions, introduces periodic tenancies, and creates a national landlord register. Letting agents report a surge in tenant applications for properties that allow pets and offer longer security. Tenants are trading location for quality and length of tenancy. That shifts the yield equation: a property that lets quickly at a premium needs fewer void days to outperform a cheaper unit that sits empty for six weeks.
Scottish rents rose 5.8% year on year to £1,043, but the Scottish Government’s rent control framework for private tenancies continues to cap increases in rent pressure zones. Landlords in Edinburgh and Glasgow report net yields of 4.5% to 5.5%, below northern England equivalents. Wales, with its Renting Homes (Wales) Act 2016 framework and 3.9% rent growth, offers steadier returns in Cardiff (5.8% gross) than in rural areas.
Yield hotspots for 2026: a regional breakdown
- Liverpool: 8.5%–9.1% gross yields; average rent £1,050; low entry prices; high LHA demand.
- Manchester: 7.0%–8.2% gross; average rent £1,150; strong professional and student demand.
- Bradford and Leeds: 6.8%–7.6% gross; average rent £975–£1,100; regeneration and transport investment.
- Stoke-on-Trent: 7.5%–9.0% gross; average rent £850; lowest entry prices in England.
- West Midlands (Walsall, Wolverhampton): 6.5%–7.5% gross; average rent £925; HS2 supply chain demand.
- Cardiff: 5.5%–6.0% gross; average rent £1,100; constrained supply.
These figures are gross yields before mortgage, tax, and costs. A 7.5% gross yield in Stoke-on-Trent can net 4.2% after a 5% mortgage rate and 25% deposit; the same property in London at 3.8% gross nets under 2%. The regional gap in net returns is now wider than at any point since 2013.
Practical steps for landlords and investors
Focus on net yield, not headline gross. Run the numbers with a 5% mortgage rate, 10% void allowance, and £1,500 annual maintenance per unit. Check EPC ratings before you buy; a D-rated property in a low-yield area is a capital liability. Target areas with strong rental demand from key workers, students, and local housing allowance tenants. And review your portfolio annually against the Renters’ Rights Bill requirements, because compliance failures now carry fines of up to £7,000 per breach and potential rent repayment orders.
The buy-to-let market in 2026 rewards landlords who treat property as a business with real cost tracking. Northern yields are rising because supply is tight and demand is steady. Southern yields are flat because affordability caps rent growth and regulation raises costs. The data points to the North West, Yorkshire, and the West Midlands for income-focused investors, with Scotland and Wales offering lower yields but more stable regulatory frameworks.
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