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Jul 15
a large brick building with lots of windows

Buy-to-Let Yields Are Climbing Again. Here Is Why 2026 Is a Turning Point for Property Investors

By Uncategorized

Two months ago, the biggest shake-up to the UK private rental sector in a generation quietly came into force. The Renters’ Rights Act, which took effect on 1 May 2026, abolished Section 21 “no-fault” evictions and converted virtually every assured shorthold tenancy in England into a periodic tenancy overnight. Some landlords panicked. Others sold up. But something else is happening beneath the headlines: for investors who have done their homework, buy-to-let is becoming measurably more attractive than it has been in years.

The average gross yield across UK buy-to-let property now sits at 7.2%, up from 7% across 2025 and significantly above the pre-pandemic average of 5.8% recorded in 2019. Rents are still rising, albeit more slowly than in the post-Covid frenzy. And with house prices growing at just 1.7% annually as of May 2026, the income story is increasingly where the real numbers are. Here is what is actually happening in the market right now.

The Renters’ Rights Act: What Changed and What It Means for Investors

The headline change under the new legislation is straightforward: landlords can no longer end a tenancy simply by serving a Section 21 notice. From 1 May 2026, possession requires a legally valid reason, and the grounds have been tightened. Rent arrears thresholds before possession proceedings can begin have been extended to three months, and notice periods doubled to four weeks. Landlords who had not issued the mandatory information sheet to tenants by 31 May faced fines of up to £7,000, with serious breaches carrying penalties of up to £40,000.

This is not insignificant. But experienced investors know that good tenants, properly managed properties, and well-chosen locations have always been the foundation of a successful portfolio. The Act has accelerated the exit of landlords who relied on high turnover or corner-cutting to make the numbers work. That consolidation is actually tightening supply in the private rental sector, which puts upward pressure on rents and strengthens the position of landlords with compliant, professionally managed stock.

At Aton Homes, the shift in the legislative landscape is something the team has been watching closely. The emphasis has always been on building resilient, income-producing portfolios rather than flipping for short-term capital gain, and that approach is looking increasingly well-suited to where the market is heading.

Rental Supply Is Still Critically Short

One of the most important numbers in the current market is this: there are roughly 25% fewer homes available to rent today than there were before the pandemic. New supply into the private rented sector has remained stubbornly low. The result is that even though tenant competition has eased from the extraordinary peak of 15.5 enquiries per property in 2022, the figure still stands at 5.6 enquiries per rental home as of May 2026. That is not a slack market. That is a market where quality rentals continue to find tenants quickly.

Average UK rents hit £1,381 per month in April 2026, representing 3.5% annual growth. The pace has slowed from the double-digit surges of recent years, but the direction of travel has not changed. Most analysts expect full-year 2026 rental growth to settle in the 2% to 3.5% range. For investors focused on yield rather than capital growth, that steady income picture, combined with rising yields, is a genuinely compelling backdrop.

The North of England Is Delivering the Strongest Yields in the Country

Not all buy-to-let opportunities are equal, and the regional picture in 2026 is sharper than ever. While London house prices continue to slide (down 2.1% between April 2025 and April 2026, from an average of £565,000 to £553,000), the North of England is producing yield figures that have caught serious investor attention.

Newcastle is currently recording the highest gross yields nationally at 9.7%, with Leeds close behind at 9.6%. Bradford offers average city-wide yields of around 7%, with certain postcodes reaching 10% to 11.6%. The North East as a whole is seeing rental growth between 6.5% and 7.6% annually, the fastest of any UK region, despite having some of the most accessible entry prices in the country. In a market where affordability constraints are squeezing buyers and driving sustained rental demand, those fundamentals add up.

The drivers behind this outperformance are familiar: lower entry prices mean more competitive yields, regeneration projects in cities like Leeds and Newcastle are expanding employment bases, and the tenant demographic in northern cities includes a growing student and young professional population with consistent rental needs.

Interest Rates, Mortgage Costs, and the Current Calculation

The Bank of England has held the base rate at 3.75% for four consecutive months, with inflation expected to edge back towards 4% later in 2026 as the energy price cap rises. For buy-to-let investors, this means mortgage costs are unlikely to fall sharply in the near term. The calculation has shifted: leveraged returns need more careful structuring than they did in the low-rate era, and lenders are continuing to stress-test at higher rates.

But this is also why the yield improvement matters. When house prices are growing slowly and gross yields are above 7%, the gap between financing costs and rental income is real. Investors who buy with strong rental demand in mind, rather than hoping for capital appreciation to do the heavy lifting, are finding that the income case for buy-to-let stands up on its own.

What Smart Investors Are Doing Now

Buy-to-let demand has not disappeared. It has shifted. The growth is coming from experienced investors who are reshaping existing portfolios and making targeted acquisitions in high-yield locations, often with a focus on HMOs (houses in multiple occupation) and multi-unit freehold blocks. Finance demand for these property types in Northern England and the Midlands rose 18% year-on-year in 2025. The profile of the active buy-to-let investor in 2026 is someone who treats property as a business, not a passive bet on rising prices.

The Renters’ Rights Act has changed some of the rules, but it has not changed the underlying logic of rental property as an investment class. It has, if anything, raised the floor on what constitutes a well-run investment. Properties that are compliant, professionally managed, and located in areas of genuine rental demand are proving their resilience.

At Aton Homes, we work with investors at every stage of building and refining a property portfolio. Whether you are taking a first step into buy-to-let or reassessing an existing strategy in light of the new legislative landscape, we are happy to talk through what the current market looks like in practice. Get in touch and let’s have a conversation.

Jun 01
pink and white concrete building near body of water during daytime

The Renters’ Rights Act Is Live: What UK Landlords Need to Know in 2026

By Uncategorized

On 1 May 2026, the private rented sector changed permanently. The first phase of the Renters’ Rights Act came into force, ending Section 21 “no-fault” evictions in England and introducing the most sweeping overhaul of landlord-tenant law in a generation. If you own rental property, or you’re thinking about buying some, this is the moment to get clear on what has shifted and where the opportunities now sit.

What the Renters’ Rights Act Actually Changes

The headline change is the abolition of Section 21. Until now, landlords could issue a no-fault eviction notice without giving any specific reason, provided they gave the required notice period. That option is gone. Landlords can still reclaim their property, but they now need to rely on specific grounds set out in law, such as the tenant failing to pay rent, causing damage, or the landlord needing to sell or move in.

The Act also introduces stronger protections against rent increases, giving tenants the right to challenge rises they consider above market rate through a new tribunal process. Bidding wars on rental properties are now banned, and landlords must publish a fixed asking rent. For the 11 million private renters in England, these are meaningful protections. For landlords, the message is clear: professionalise or struggle.

This does not mean buy-to-let is finished. It means the rules of the game have changed, and the landlords who understand that are already well ahead.

Rental Yields Are Still Strong, Especially Outside London

Despite the regulatory shift, the underlying economics of buy-to-let remain attractive in the right locations. Rental yields hit a record high of 6.6% towards the end of 2025, and the average gross yield across UK buy-to-let properties in Q3 last year reached 7.15%. Net returns after costs typically land in the 4-5% range, which still comfortably outperforms most cash savings accounts and many bond funds.

Average UK rents for new lets are running at £1,319 per month as of March 2026, with annual growth of 1.9%. That growth rate is slowing from the sharp rises of recent years, which is actually good news for long-term landlords: a cooling market attracts less speculative money, reduces tenant turnover, and keeps the regulatory spotlight slightly dimmer. The North East is still recording annual rent inflation of 8%, while Liverpool, Newcastle and Glasgow are all seeing growth of between 3% and 4.6%. These regions continue to offer the strongest combination of yield and capital resilience.

At Aton Homes, our focus has always been on identifying regional markets where rental demand is structurally supported rather than dependent on one employer or one postcode. That discipline looks even more important heading into the second half of 2026.

The Limited Company Landlord Boom Is Reshaping the Market

One of the most significant structural shifts in the buy-to-let market has been the rapid move towards holding properties through limited companies. In 2025, 66,587 new buy-to-let limited companies were registered, an 8% increase on the year before and a 363% rise over the past decade. In January 2026 alone, 5,922 new landlord companies were set up. Around 80% of new buy-to-let purchases are now made through a limited company structure, most commonly as Special Purpose Vehicles (SPVs).

The reason is largely tax. When the Section 24 mortgage interest relief restrictions were phased in, individual landlords lost the ability to deduct mortgage interest from rental income before calculating their tax bill. Limited companies never lost that deduction. They can still offset 100% of mortgage interest as a business expense, with profits then taxed at corporation tax rates of 19-25% depending on size. For landlords with multiple properties or higher income, the numbers often favour incorporation by a significant margin.

Limited company landlords also tend to hold larger portfolios. The average individual landlord holds around 4.9 properties; the average limited company landlord holds 15.9 and is more likely to hold HMOs. According to survey data, 84% of incorporated landlords expect yields to increase within the next 12 months.

House Prices: A Buyers’ Market Is Emerging in Some Regions

On the purchase side, conditions have shifted in favour of buyers in parts of the country. UK average house prices in England sit at around £290,000, down 0.6% annually as of March 2026. London has seen the sharpest falls, with prices down 2.1% year-on-year to an average of £542,000. Knight Frank is forecasting 1.5% national price growth for 2026, followed by 3% in 2027 and 4% in 2028.

For buy-to-let investors, a flat or gently falling purchase price environment combined with strong rental yields is a good setup. The entry cost is lower, the yield calculation improves, and there is capital growth potential baked in once the market recovers its usual momentum. Northern Ireland, Wales and Scotland are all still recording faster price growth than England, which matters for investors with a UK-wide view.

Rental demand has cooled, running 14% below last year’s levels as supply improves and first-time buyer activity picks up in some areas. A less frantic rental market is not a bad thing for a landlord focused on quality, long-term tenancies rather than maximising short-term rents.

How to Position a Portfolio for the New Regulatory Environment

The landlords who will thrive under the Renters’ Rights Act are those who treat their properties as a proper business rather than a side arrangement. That means ensuring properties meet the upcoming Decent Homes Standard requirements, keeping records in order, using proper tenancy agreements, and being responsive when issues arise. It also means being selective about where you invest, focusing on locations with diverse employment bases and sustained rental demand.

The Act does introduce a more demanding compliance environment, but it also changes the competitive landscape. Accidental landlords who have been operating informally for years will find the new obligations harder to meet, and some will exit the market. That exit creates opportunity for professional landlords to acquire well-located stock and fill it with well-qualified tenants.

There is also a growing case for properties that attract longer-term tenants by design: well-maintained homes in family-friendly areas, near good transport links, with outdoor space. Tenants who stay for three or four years rather than one are good for everyone. That alignment between tenant satisfaction and landlord stability is exactly what the new rules are designed to encourage.

The second half of 2026 will bring further clarity on how the new eviction grounds are interpreted by courts and whether any technical amendments follow from early practical issues. The broader picture suggests a market that rewards careful selection over speculative buying. Investors who go in well-informed, with the right structure and the right locations, are likely to look back on this period as a good time to have been active.

At Aton Homes, we spend a lot of time thinking through exactly these questions for the investors we work with. If you want to talk through how the Renters’ Rights Act affects a specific portfolio, or you are exploring buy-to-let for the first time, we are always happy to have that conversation. Get in touch and let’s talk through the options.

May 14
red blocks on brown wooden table

The Renters’ Rights Act Is Now Live. Here’s What Smart Landlords Are Doing Next.

By Uncategorized

From 1 May 2026, the landscape for private landlords in the UK changed fundamentally. The Renters’ Rights Act 2025 came into full force this month, and with it came the biggest shake-up of private rented sector rules in more than three decades. Section 21 no-fault evictions are gone. Assured Shorthold Tenancies are gone. Fixed terms are gone. Almost overnight, millions of existing tenancies converted to new assured periodic contracts.

The reaction from landlords has been split. Some have already left. Many more are thinking about it. But a growing number are adjusting their strategy, keeping their heads down, and quietly capitalising on conditions that, for disciplined investors, are arguably the best in over a decade.

What the Act Actually Changes for Landlords

The headline change is the abolition of Section 21. Landlords can no longer issue a notice to quit without giving a legal reason. All evictions now go through Section 8, using specified grounds that range from rent arrears to the landlord requiring the property for personal use. Courts will adjudicate. The process takes longer, and it requires proper documentation from the start.

Alongside that, all tenancies are now periodic from day one. There are no more fixed terms to lock tenants in. Tenants can give two months’ notice to leave at any point. Rent increases must go through a Section 13 notice process, with tenants able to challenge any proposed rise through a tribunal if they believe it is above market rate. Landlords also cannot advertise a property at a price above what they genuinely intend to accept, banning the practice of rental bidding that became common in competitive markets.

One of the lesser-discussed requirements is the Information Sheet obligation. Any landlord with an existing tenancy must provide the government’s official Information Sheet to their tenant by 31 May 2026, or face a fine of up to £7,000.

The Landlord Exodus and What It Means for Those Who Stay

The regulatory pressure is not new. Landlords have been navigating tax relief reductions, higher stamp duty rates on additional properties, and EPC upgrade requirements for several years. The Renters’ Rights Act is, for many, the final straw.

Research from Savills estimates that approximately 93,000 landlords exited the private rented sector in 2025, with a further 110,000 potentially set to follow in 2026. That translates to a substantial reduction in available rental stock at precisely the moment when rental demand remains at near-record levels.

For those who remain, the maths has become rather interesting. Average rental yields across the UK now stand at 7.11%, the highest figure recorded since 2011. Wales leads at 8.4%, with strong numbers across the North of England and Scotland. Buy-to-let lending purchase activity hit £10 billion in the most recent period, matching 2024 and exceeding 2023, clear evidence that investor appetite has not collapsed. It has simply become more selective.

The Structural Shift Toward Limited Companies

One of the most significant shifts in buy-to-let over the past two years has been structural rather than operational. More landlords are now purchasing investment properties through limited company vehicles rather than in personal names. By 2025, buy-to-let limited companies had become the single largest business type registered in the UK, with over 400,000 firms on record.

The driver is largely tax efficiency. Limited companies pay corporation tax on rental profits rather than income tax at marginal rates, and mortgage interest remains fully deductible as a business expense within a company structure. For higher-rate taxpayers building a portfolio, the numbers often look very different through a company versus personal ownership.

At Aton Homes, we work with investors across both structures. The right approach depends heavily on individual circumstances, exit strategy, and portfolio size, which is why we always recommend speaking with a specialist tax adviser before committing either way.

Where Yields Are Strongest Right Now

Location continues to drive outcomes in buy-to-let. The regional picture for 2026 is one of divergence. Northern Ireland led on house price growth in Q1 2026, with annual gains of 9.5%. Yorkshire and the Humber are forecast to see price growth of between 3.5% and 4% over the year, while London lags behind. For yield-focused investors, cities across the North West, Yorkshire, Wales, and Scotland consistently top the tables.

House prices nationally are expected to rise between 3% and 3.5% through 2026, according to leading analysts, while rents are forecast to grow at 2% to 2.5% annually over the next three years. The combination of supply contraction and persistent demand underpins both figures. More landlords leaving means fewer rental properties. Fewer properties chasing the same pool of renters means rents hold, or climb.

That dynamic is unlikely to reverse quickly. Planning constraints, construction costs, and the pace of new build delivery mean the supply shortfall in rental housing will not be fixed by 2027. For investors with a five-to-ten year horizon, the structural case for well-located UK residential property remains intact.

Adapting Rather Than Exiting

The landlords who are navigating this environment best share a few traits. They have tightened their tenant referencing. They keep detailed records on every tenancy from the outset. They have reviewed their insurance policies in light of the new eviction timeline. And they have been proactive about compliance rather than waiting for a notice from a local authority.

The Renters’ Rights Act does raise the bar. But it also raises the floor. A more professionalised market, with better-managed properties and clearer legal processes, is ultimately a healthier long-term investment environment. The landlords who invested in properties they could maintain properly were never really competing with those who were not. Now, the rules have made that distinction explicit.

At Aton Homes, we have been helping investors identify and acquire buy-to-let properties across the UK throughout this period of transition. We understand that the regulatory environment feels daunting right now, and that is exactly why we are here. Whether you are assessing your existing portfolio, thinking about your first investment property, or simply trying to understand what the new rules mean for your situation, we are happy to have that conversation. Visit aton-homes.com or get in touch directly. No pressure, just a straight conversation about where the market stands and where the opportunities are.