Landlords have had a rough ride over the past decade. Increased taxes, the loss of full mortgage interest tax relief, higher mortgage rates, and a raft of new regulations have all weighed heavily on the sector, prompting some investors to sell up and fewer to buy.
However, for those who bought historically and have stayed the course, the bumps in the road have been cushioned significantly by rental growth.
A limited supply of rental properties and strong tenant demand have pushed rents in Great Britain 51% higher over the past decade and 35% higher over the past five years alone. While rents are now cooling, investors who bought five to 10 years ago, when property prices and mortgage interest rates were lower, have seen their returns rise significantly. House prices have risen by 24% over five years and by 49% over 10 years.
Across England and Wales, a landlord who invested in 2016 has seen their average gross yield rise from 6.1% back then to 8.2% today. This means that if they bought a property costing £300,000, their annual rental income would have risen from £18,300 to £24,600 if it kept pace with the broader market. Meanwhile, a landlord who bought this year is achieving an average gross yield of 7.8%.
Investors in the North East have long enjoyed the highest rental yields and lower property prices, which have protected them from the impact of higher stamp duty rates. A landlord who bought a property to let in 2016 in this investment hotspot would have seen their gross yield rise from 9.4% back then to 12.1% now. Someone who invests in a rental property in the North East today is grossing an average 10.9% yield.
London is the lowest-yielding region and rents have also fallen recently – by 2.7% in the year to September 2025 – dragging yields down slightly. Returns peaked last year, but even so, an investor who bought in 2016 and achieved a gross 5.0% yield has seen that increase to 5.7% today. In fact, London has witnessed some of the most substantial yield inflation in the country over the last five years.
Rental growth is now slowing nationally, with the average rent for a newly-let home in Great Britain falling by 0.3% in the year to September. However, the subdued sales market, especially in prime segments, means many landlords are opting to hold onto their properties rather than sell them.
So far this year, 13.9% of all sellers across Great Britain have been landlords. This proportion is up slightly from 13.5% in 2024 but still lower than 16.4% seen in 2022, when the sales market was booming post-Covid.
More landlords are selling up in the capital – one in four homes sold in London in 2025 belonged to a landlord – but this proportion has remained stable year-on-year.
All this means that, especially for landlords who operate within limited companies and haven’t remortgaged at high loan-to-value (LTV) rates, rental growth will likely have offset much of the pain of higher taxes and mortgage rates. The number of buy-to-let companies set up across the UK is running 8% ahead of last year's record levels – at current rates, some 67,000 new companies will be created by the end of 2025.
However, conditions for new investment into buy-to-let remain challenging and complex. House prices and mortgage rates are still relatively high, with above-target inflation meaning that no further cuts to the Bank rate are predicted until next year at the earliest. There is also caution among some investors about the implications of the Renters’ Rights Bill. This represents the most significant changes to the private rented sector in almost 40 years and is expected to become law early next year. However, it's clear that landlords are finding ways to make the landscape work - and the pace of rental growth has been the saving grace for many.
