The trade-off was highlighted in the latest Pegasus Insight Landlord Trends Report, produced in conjunction with Foundation. It found that regions delivering the highest rental returns are not always those with the most valuable property portfolios.
London delivers asset value but lower yields
Landlords in Central London reported the highest average portfolio value in the UK at £3.7m, alongside the highest rental income per property at £17,989.
Despite higher rents, landlords in the capital achieved average rental yields of 5.3%, below the national average of 6.4%.
According to Foundation, the figures illustrate the balancing act faced by many London investors, who often accept lower yields in exchange for stronger long-term capital growth and higher-value assets.
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Regional markets lead on rental returns
Outside the capital, landlords enjoyed stronger yields.
The East of England and East Midlands recorded the UK’s highest average rental yields at 7.3%, while Yorkshire and The Humber achieved 6.8% and the North East returned 6.6%. Both the South West and West Midlands posted average yields of 6.5%.
Commenting on the perceived pull toward northern markets, Jorden Abbs, CEO of Commercial Trust, said: “The central attraction is often the relationship between purchase price and achievable rent. Lower entry prices can reduce the capital needed to invest, while strong tenant demand can offer landlords the potential for more attractive rental yields.”
Higher yields comes with higher risks
The report showed that stronger rental returns may be accompanied by greater operational challenges.
The North East, while delivering one of the highest average rental yields at 6.6%, also recorded the highest proportion of landlords experiencing void periods, at 55%. The region also reported rental arrears affecting 42% of landlords.
Arrears levels were also elevated in some other high-yielding regions. Yorkshire and The Humber reported rental arrears among 43% of landlords, followed by the North West at 39% and the East Midlands at 37%. All were well above the UK average of 26%.
Abbs said investors should look beyond headline yield figures.
“A lower purchase price is only valuable if the property can attract and retain suitable tenants, and if the expected rent comfortably covers mortgage payments, maintenance, compliance and periods when the property may be empty,” he said.
Landlord migration north is not straightforward
While investor interest in northern regions appears to be increasing, Abbs warned against viewing the trend as a simple shift away from southern markets.
He said the market presents “a more nuanced picture than a wholesale move from South to North”.
The research also pointed to ongoing portfolio restructuring across the sector. The North West recorded the highest proportion of landlords selling properties in the past year at 30%, followed by Yorkshire and The Humber at 29% and the East Midlands at 25%.
National picture remains resilient
Across the UK, landlords reported an estimated average portfolio value of £1.8m in Q2 2026.
Average gross rental income stood at £12,007 per property, while average rental yields reached 6.4%.
Grant Hendry, director of sales at Foundation, commented: “The latest research reinforces the fact there is no such thing as a typical buy to let market. While headline figures show a sector that remains profitable and resilient, the regional data reveals very different opportunities and challenges depending on where landlords are investing.
Hendry continued: “For brokers, understanding these local market dynamics has never been more important. The most effective advice goes beyond simply comparing rates and products. It involves helping landlords assess their long-term objectives, refinancing requirements, acquisition plans and portfolio strategy. By understanding the regional picture, brokers can better support clients in identifying the most appropriate opportunities and solutions, ultimately making mortgages happen.”
