Despite a backdrop of tighter regulation and higher financing costs, 2025 is shaping up to be one of the strongest years in recent memory for landlord returns.
From Yorkshire to the Midlands, gross yields have ticked upward, void periods remain low, and rental demand continues to rise—bringing optimism back to the private rented sector.
In this article, we break down why landlord returns are improving, where performance is strongest, and how smart investors are capitalising on the new dynamics.
What’s Driving the Yield Recovery?
1. Sustained Rent Inflation
- Average UK rents are up 9.2% YoY in 2025, according to Zoopla.
- Strong demand in regional cities is pushing yields above 7% in some areas.
2. Price Plateaus in Many Markets
- Slower house price growth in 2023–2024 has increased rental yield as a percentage of value.
- This has improved gross and net returns for recent buyers.
3. Rising Tenant Tenure
- With home ownership less accessible, tenants are staying longer.
- Lower turnover reduces voids, marketing costs, and refurbishment cycles.
4. Tax Strategy Improvements
- Use of SPVs has expanded, allowing better interest deductibility and tax efficiency.
- Landlords are optimising operating costs, improving net yields.
Where Returns Are Strongest
| Location | Avg Gross Yield (2025) | Notes |
|---|---|---|
| Leeds | 6.8–7.4% | Strong student and professional demand |
| Sheffield | 6.5–7.1% | Low entry, high absorption |
| Liverpool | 6.4–6.9% | Short-let and HMO hybrid models rising |
| Nottingham | 6.2–6.8% | Consistent family rental base |
| Greater Manchester | 6.0–6.7% | Fast-moving flats and city terraces |
Key Landlord Adjustments
✅ Focused on EPC-compliant, tenant-ready stock
✅ Diversified across city types and tenant groups
✅ Pricing in higher maintenance, but offset by rental strength
✅ Moving to fully managed portfolios or hybrid self-management
Ethira View
Returns in 2025 are no longer about speculative capital growth—they’re about income reliability and smart positioning.
At Ethira, we work with landlords to target:
- Consistently performing postcodes
- High-demand 2–4 bed homes
- Portfolios with built-in efficiency
Final Thoughts
2025 proves that strong returns are still very much on the table for landlords—especially those who adapt to today’s rental realities.
With the right combination of yield, compliance, and professional management, landlords can capture meaningful income performance without taking on undue risk.