TL;DR: The best buy-to-let regions in 2026 are not simply the cheapest places to buy. Paragon’s Q1 2026 lending data puts Wales and the North East at the top for gross rental yield, while ONS data shows the North East also leading England for recent rent and house-price growth. The North West, East Midlands and Yorkshire also remain strong on income. London still has scale, demand and long-term appeal, but its lower yields and weaker recent price growth make the numbers harder to justify. The key is to judge yield, tenant demand, financing, regulation and resale demand together.

Buy-to-let is having a strange year. On one side, landlords are dealing with tighter regulation, higher taxes and borrowing costs that are still nowhere near the ultra-cheap mortgage era. On the other, rental demand remains strong in many areas, average gross yields have improved and parts of northern England and Wales are delivering numbers that are difficult to ignore.

The result is a market where location matters more than ever. The national conversation often asks whether buy-to-let is still worth it. A better question is: where do the numbers still work?

September 2026 update: the wider market has not suddenly become easy for landlords. UK Finance’s mid-year review still expects buy-to-let purchase lending to be broadly flat across 2026 at about £11 billion, while Q2 arrears data improved, with 8,390 buy-to-let mortgages in arrears of 2.5% or more, down 6% from Q1. That is useful context for the yield table below: higher gross yields do not automatically mean the sector is booming, and I would still judge an area by the property-level cash flow rather than a regional league table alone.

The national buy-to-let market is stronger than the headlines suggest

UK Finance’s Q1 2026 data gives a useful starting point. There were 58,272 new buy-to-let loans advanced during the quarter, worth £10.8 billion. That was up 3.26% by number and 7.02% by value compared with the same period a year earlier.

The average gross UK buy-to-let yield rose to 7.21%, up from 6.93% in Q1 2025. At the same time, the average interest rate across new buy-to-let loans fell to 4.71%, 29 basis points lower than a year earlier. The average interest cover ratio also improved to 221%.

That does not mean the market is easy. It means the economics are improving in some areas while the risks are becoming more concentrated. A landlord buying the wrong property in a low-yield area can still lose money very quickly.

The highest-yielding UK regions in 2026

Paragon Bank’s Q1 2026 Buy-to-Let Yields report, based on its own lending data, shows a clear regional split. Wales and the North East sit at the top, followed by the North West, East Midlands and Yorkshire & the Humber.

Why the North East is particularly interesting

The North East is not just a high-yield story. ONS data shows it was also the English region with the fastest annual private-rent growth in the 12 months to June 2026, at 6.3%. London was the slowest at 2.2%.

House prices tell a similar story. In the 12 months to May 2026, the North East recorded the strongest house-price growth of any English region at 5.9%. London fell 3.7% over the same period.

The North East currently offers something landlords normally struggle to find at the same time: high rental yield and strong recent price growth.

That does not mean every property in Newcastle, Sunderland, Middlesbrough or Durham is suddenly a great investment. Regional averages are only a starting point. Postcode, property type, tenant profile, licensing rules and condition still decide whether the actual deal works.

Why Wales is leading on yield

Wales tops Paragon’s regional table at 8.74%. The basic reason is familiar: property values remain lower than in much of southern England, while rental demand is strong enough in many areas to produce a much larger rent-to-price ratio.

But Wales is not one market. Cardiff behaves very differently from the Valleys, Swansea, Newport or more rural areas. A landlord chasing the highest headline yield can easily end up buying somewhere with weaker resale demand, more maintenance risk or longer void periods.

High yield is useful because it creates a larger buffer against mortgage costs and repairs. It is not useful if the property is difficult to rent or sell.

North West: probably the broadest all-round market

The North West sits just behind Wales and the North East on Paragon’s data at 7.87%, but it arguably has one of the deepest combinations of employment, universities, regeneration and tenant demand.

Manchester and Liverpool are the obvious names, but both cities contain huge differences between postcodes. Investor demand has also pushed prices up in many previously cheap areas, so the old assumption that almost anything in the North West will deliver an easy 8% yield is no longer safe.

The better approach is to compare realistic achieved rent against the actual purchase price, then stress-test the mortgage and management costs.

East Midlands and Yorkshire still deserve attention

The East Midlands and Yorkshire & the Humber both sit above 7.4% in Paragon’s Q1 data. These areas can offer a useful middle ground between ultra-cheap high-yield markets and expensive southern cities.

Cities such as Nottingham, Derby, Leicester, Sheffield and Leeds have large employment bases, universities and established private rental markets. Again, none of those names is a strategy on its own. The right street in a strong city can work. The wrong development with a brutal service charge can destroy the return.

Why London looks weak on yield

Greater London generated the lowest regional gross yield in Paragon’s Q1 dataset at 5.74%. That is not because London has no rental demand. It is because property prices are so high relative to rent.

ONS data adds another challenge. London house prices fell 3.7% in the year to May 2026, while rent inflation was only 2.2% in the year to June. That does not tell us what happens next, but it means an investor paying a premium for London is currently accepting lower income and weaker recent capital-growth numbers.

London can still make sense for investors who value liquidity, international demand, employment depth and long-term scarcity. It simply requires a different return profile and usually a much larger amount of capital.

The mortgage market is helping, but not enough to rescue a bad deal

The average rate on new buy-to-let borrowing was 4.71% in Q1 2026, according to UK Finance. That is lower than a year earlier and gives landlords some breathing room compared with the worst of the rate shock.

But the headline mortgage rate is only one line in the spreadsheet. Product fees, valuation charges, broker costs, early repayment charges and the lender’s interest-coverage rules all matter. A low rate with a large percentage fee can be more expensive than a slightly higher rate with a smaller fee.

Gross yield is not your actual return

A gross yield of 8% sounds strong. But gross yield ignores most of the costs that decide whether the landlord actually makes money.

• Mortgage interest and product fees
• Stamp duty or the equivalent property transaction tax
• Letting and management fees
• Repairs and maintenance
• Insurance and compliance
• Void periods and arrears
• Service charges and ground rent where relevant
• Licensing and HMO costs
• Income tax or corporation tax
• Legal and accounting fees

A property yielding 8% gross can produce a mediocre net return if it has high finance costs, a large service charge and regular repairs. A 6.5% property with low maintenance and strong tenant demand can sometimes be the better investment.

The rules changed in England on 1 May 2026

The economics are only half the story. From 1 May 2026, the first major tenancy reforms under the Renters’ Rights Act 2025 came into force in England.

Section 21 no-fault evictions ended for new and most existing private tenancies. Most assured shorthold tenancies became assured periodic tenancies. Rent increases are generally limited to once a year using the prescribed process, rental bidding above the advertised rent is banned, and tenants can request to keep a pet.

These rules do not apply in exactly the same way across Wales, Scotland and Northern Ireland, so a landlord comparing regional yields must also compare the legal regime in that nation.

My buy-to-let checklist for 2026

So where would I look?

If I were screening regions today, Wales and the North East would deserve serious attention because of their yields. The North West would remain high on the list because of the depth of its major rental markets. The East Midlands and Yorkshire would also be worth researching for investors who want a balance of affordability and tenant demand.

But I would not buy anywhere simply because a regional table says 8%. The regional figure gets you into the right part of the map. The actual investment decision happens at postcode, street and property level.

The best buy-to-let region is only useful if you can find a good property inside it.

Watch: my latest buy-to-let breakdown

I go deeper into the current buy-to-let market, yields, mortgage rates and the regional divide in the video below.

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Frequently asked questions

Which UK region has the highest buy-to-let yield in 2026?

Paragon’s Q1 2026 lending data puts Wales first at 8.74%, followed by the North East at 8.10%. These are averages from Paragon’s lending data, not guaranteed returns.

Is the North East good for buy-to-let?

The North East currently combines high average yields with strong recent rent and house-price growth, but local performance varies heavily by postcode and property type.

Is London still worth considering?

London can still appeal because of its tenant demand, employment base and liquidity, but current gross yields are lower and recent house-price growth has been weaker than in many northern regions.

What is a good rental yield in 2026?

There is no universal number. A higher gross yield gives more room for costs, but net return, tenant demand, maintenance and resale demand matter more than the headline percentage.

Did Section 21 end in 2026?

Yes. In England, Section 21 no-fault evictions ended for new and most existing private tenancies from 1 May 2026 under the Renters’ Rights Act 2025.

Sources and further reading

• UK Finance: Buy-to-Let Lending, Q1 2026
• Paragon Bank: Q1 2026 Buy-to-Let Yields
• ONS: Private rent and house prices, UK, July 2026
• GOV.UK: Repossessing privately rented property after 1 May 2026

Disclaimer: This article is for information and education only. It is not personal financial, mortgage, tax or legal advice, and it is not a recommendation to buy a property or mortgage product. Property prices and rents can fall as well as rise. Mortgage products can change or be withdrawn. Tax and landlord rules depend on your circumstances and location.

Written by Aren Deu | The Anxious Investor