The top areas for buy-to let rental yields

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The UK buy-to-let market is facing challenges with slowing rental growth and increasing regulations, but landlords can still earn a good return. Benefits of property investing have been affected by slow rental growth, tax relief restrictions, and increased regulations like the Renters' Rights Bill. This has led some landlords to consider leaving the market.

Despite reduced supply, demand has also slowed as more tenants become homeowners. According to Zoopla, the rate of rental growth in the UK at the end of 2024 was 3.9%, the lowest in over three years. However, Rightmove data shows rental inquiries are still high, keeping rents and growth up.

In the UK’s buy-to-let hotspots, demand remains strong but tenants’ ability to pay higher rents is limited. Zoopla data shows rental growth in London’s lower-value areas ranged between 3% and 6% at the end of 2024. Outside London, rents are rising fastest in Rochdale at 11.9% annually, followed by Belfast at 11.5%. Other notable areas include Blackburn, Birkenhead, Burnley, and Newcastle.

Rents are not expected to drop in 2025 as supply remains tight. Rightmove predicts average newly advertised rents will rise by 3% outside of London and in London by the end of 2025.

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