Best and worst rental yields revealed as landlords brace for government tax grab

With landlords facing an additional 2 percentage point increase in property income tax rates following the Autumn Budget, new research from residential property management specialist Rushbrook has revealed the areas of England and Wales offering the highest and lowest rental yields, highlighting where landlords may be best positioned to absorb the additional financial pressure.

Rushbrook analysed the latest UK House Price Index and Office for National Statistics private rental data for August 2026, comparing average house prices and monthly rents to calculate estimated gross rental yields across local authorities in England and Wales.

Across England, the average house price stands at £293,525, with monthly rents averaging £1,459, producing an estimated gross rental yield of 6.0%. In Wales, the average gross rental yield is lower at 4.7%.

Lowest rental yields leave landlords with less room to manoeuvre

Derbyshire Dales has the lowest estimated gross rental yield across England and Wales at just 2.9%, less than half the average recorded across England.

Elmbridge and Waverley in Surrey follow at 3.1%, alongside Powys in Wales, also at 3.1%, while Malvern Hills ranks fifth at 3.2%.

Uttlesford and Forest of Dean both record yields of 3.3%, with East Devon, South Hams and Mole Valley completing the ten lowest-yielding locations at 3.4%.

These comparatively low yields suggest landlords in these areas may have less rental income relative to property values from which to absorb additional taxation and rising operating costs, particularly where mortgage payments and maintenance expenses are already placing pressure on profitability.

Highest rental yields offer greater financial headroom

At the other end of the market, Newcastle upon Tyne offers the highest estimated gross rental yield across England and Wales at 6.9%, more than double that recorded in Derbyshire Dales.

Portsmouth follows at 6.7%, with Tower Hamlets in London ranking third at 6.6%.

Nottingham, Manchester, Southampton and Bristol all record estimated gross rental yields of 6.4%, while Salford follows at 6.3%.

Blackpool and Lincoln complete the ten highest-yielding locations, both at 6.2%.

While higher gross yields do not guarantee greater profitability, they indicate a stronger rental income return relative to property values, potentially giving landlords more scope to manage rising costs without immediately passing them on to tenants.

Managing Director of Rushbrook, Roma Sharma said: “The Government’s decision to increase property income tax rates adds another layer of financial pressure for landlords, but the impact will vary considerably depending on where they own property and the returns they are already achieving.

Those operating in lower-yielding areas may find themselves with very little room to absorb further costs once mortgage payments, maintenance and other expenses are accounted for. While stronger yields provide a better starting point, they certainly don’t make landlords immune to the additional tax burden.

With profitability coming under increasing pressure, effective property management is more important than ever. Minimising void periods, managing maintenance proactively and keeping unnecessary expenditure under control can make a meaningful difference to the long-term viability of a rental investment.”