The North Is Now the Fastest UK Rent Growth Region. Here’s What That Does to Rental Yields

If you are a landlord sitting on a low-yielding property in London or the South East and wondering whether your next purchase should be somewhere else, the latest figures give you a clear steer. UK rent growth reached 3.8% in the year to August 2026, but it is running at 5.8% in the North East and North West and just 3% in the South East, according to the Office for National Statistics’ Price Index of Private Rents (PIPR).

With UK rents rising almost three times faster than UK house prices, gross yields are widening — and fastest in the regions where property prices are lowest. That makes the regional gap in rent growth more significant for landlords weighing up where to buy next. This article breaks down the regional yield picture and the tax you need to factor in before making a purchase.

Where is UK Rent Growth Strongest?

Rent growth is strongest in the North East and North West, where rents increased by 5.8% in the year to August 2026, according to the ONS. The North East is also the cheapest English region to rent in, with the average monthly rent standing at £788.

London and the South East sit at the other end of the spectrum. London has the highest average rent in the table, while the South East recorded the UK's slowest regional rent growth at 3%.

Why Rising Rents & Flat Property Prices Push Rental Yields Up

Rising rents push rental yields higher when property prices are barely moving because the landlord is collecting more income from an asset that has not become more expensive. Gross yield is simply the annual rent divided by the property’s value. So, when rent rises faster than the property price, the resulting yield percentage goes up.

The latest UK figures show this effect in action. According to the ONS, the average UK house price rose by just 1.4% to £273,000 in the year to July 2026, while private rents increased by 3.8% in the year to August.

Why Are Rents Rising Fastest in the North?

Rents are rising fastest in the North because strong rental demand is meeting a limited supply of homes. Meanwhile, higher rents and property prices in London and the South East leave less room for further increases.

This shortage of rental property is not a problem limited to the North. Industry commentators have linked the decline in rental supply across the UK to landlords leaving the market following successive tax and regulatory changes, including the Renters Rights Act, whose main reforms took effect in England on 1 May 2026.

But Don’t Rush to Buy a Property in the North Just Yet

At this point, you may be thinking about buying your next rental property in the North. But before you start looking, you need to consider one other side of the rental yield calculation – tax. Stamp Duty Land Tax (SDLT), Capital Gains Tax (CGT) and the tax treatment of mortgage interest can materially change the return a landlord actually achieves.

Buying an additional property, for example, triggers the higher rates of SDLT. Since 1 April 2025, these rates have ranged from 5% to 17%, with the applicable rate increasing progressively across the purchase-price bands under Schedule 4ZA to the Finance Act 2003, as amended. If the buyer is non-UK resident for SDLT purposes, a further 2% surcharge applies on top of these rates.

That makes the cost of entering the northern market an important part of the rental yield calculation. A property may offer a higher rent relative to its purchase price, but the buyer has to put more cash into the transaction before receiving any rental income. For a landlord buying an additional property of £250,000, the SDLT bill alone can be substantial, particularly where the 2% non-resident surcharge also applies.

There can also be a tax cost at the other end of the transaction. If you sell an existing property to release the capital for a northern purchase, any taxable gain on that sale can reduce the amount available to reinvest. UK residential property gains generally have to be reported and the Capital Gains Tax paid within 60 days of completion. The tax does not change the rental yield of the new property, but it can change how much capital you have left to put into it.

Then there is the ongoing tax treatment of borrowing. Individual landlords cannot simply deduct mortgage interest from their property income when calculating their taxable profit. Instead, Section 24, now reflected in Section 272A of the Income Tax (Trading and Other Income) Act 2005, provides a basic rate tax reduction equal to 20% of qualifying finance costs. The effect can be significant for a higher-rate taxpayer with substantial borrowing.

So yes, the North may genuinely offer stronger rental returns. But before you move your investment strategy north, work out what you will actually pay to buy the property, how much capital you will have left after any sale, and how much of the rental income you will retain after tax and financing costs. A higher headline yield is the starting point for the comparison, not the end of it.

Conclusion

The latest figures give landlords a clear reason to look beyond London and the South East. But the regional rental yield advantage is only useful if it survives the costs of actually investing there.

So, the North deserves a place on a landlord's shortlist, but not an automatic place in the portfolio. The next step is to take an actual property, calculate its rent, purchase costs, financing, tax and expected net income, and see whether the stronger headline yield still produces a worthwhile return.