The highest rental yield in the UK property market in the first quarter of 2024 was in the North East region, amounting to **** percent. Conversely, private rental homes in London had the lowest average gross yield, at **** percent. Rental yield is a measure of profitability and shows the annual rental income as a share of the property price. Although higher yields imply a higher annual return, they do not take into consideration the rental growth and house price appreciation potential of the property.

Renters in the UK spent on average 32.5 percent of their income on rent as of January 2025. Scotland and Yorkshire and Humber were the most affordable regions, with households spending less than 28 percent of their gross income on rent. Conversely, London, South West, and South East had a higher ratio. Greater London is the most expensive region for renters Greater London has a considerably higher rent than the rest of the UK regions. In 2024, the average rental cost in Greater London was more than twice higher than in the North West or West Midlands. Compared with Greater London, rent in the South East region was about 600 British pounds cheaper. London property prices continue to increase In recent years, house prices in the UK have been steadily increasing, and the period after the COVID-19 pandemic has been no exception. Prime residential property prices in Central London are forecast to continue rising until 2027. A similar trend in prime property prices is also expected in Outer London.

Median monthly rental prices for the private rental market in England by bedroom category, region and administrative area, calculated using data from the Valuation Office Agency and Office for National Statistics.

The average agreed rent for new tenancies in the UK ranged from *** British pounds to ***** British pounds, depending on the region. On average, renters outside of London paid ***** British pounds, whereas in London, this figure amounted to ***** British pounds. Rents have been on the rise for many years, but the period after the COVID-19 pandemic accelerated this trend. Since 2015, the average rent in the UK increased by about ** percent, with about half of that gain achieved in the period after the pandemic. Why have UK rents increased so much? One of the main reasons driving up rental prices is the declining affordability of homeownership. Historically, house prices grew faster than rents, making renting more financially feasible than buying. In 2022, when the house price to rent ratio index peaked, house prices had outgrown rents by nearly ** percent since 2015. As house prices peaked in 2022, home buying slowed, exacerbating demand for rental properties and leading to soaring rental prices. How expensive is too expensive? Although there is no official requirement about the proportion of income spent on rent for it to be considered affordable, a popular rule is that rent should not exceed more than ** percent of income. In 2024, most renters in the UK exceeded that threshold, with the southern regions significantly more likely to spend upward of ** percent of their income on rent. Rental affordability has sparked a move away from the capital to other regions in the UK, such as the South East (Brighton and Southampton), the West Midlands (Birmingham) and the North West (Liverpool, Manchester, Blackpool and Preston).

Scotland provided the highest gross rental yield for buy-to-let properties in the UK in the third quarter of 2024. The average yield in Scotland amounted to *** percent, making it one of the most profitable markets. In London, the average yield was *** percent, reflecting the highly competitive nature of the capital.

London is the most expensive city for office real estate in Europe. In 2023, the per square foot cost of office space in London was higher than in any other European city. In West End, a Grade A office cost about 90 British pounds per square foot in 2023. Prime offices were even more expensive, at 135 British pounds per square meter. Office yields Prime yields in Central London fluctuate depending on the district, but West End areas tend to have lower yields compared to other areas, such as Stratford or Canary Wharf. The prime office yield in Mayfair/St. James' in 2023 was the lowest among the major London office submarkets. In real estate, yields measure the potential return of a rental property and are calculated as the ratio of the property's rental income to the investment cost. Typically, prime office yields in London are lower than the rest of the UK, which is mostly due to the highly competitive market and high investment costs. Vacancy rates Despite the high office rental costs in England’s capital city, vacancy rates in many of London's main office markets were below seven percent in 2023. This is good news for the office sector, as during the coronavirus (COVID-19) pandemic, the share of vacant office space across all Central London districts spiked dramatically. Compared to other European cities, London was in the middle of the ranking, alongside Frankfurt and Lisbon.

See the average Airbnb revenue & other vacation rental data in London in 2025 by property type & size, powered by Airbtics. Find top locations for investing.

Prime yields for high street retail properties in the UK have increased since 2019. As of June 2025, yields were the highest for good secondary properties in markets such as Truro, Leamington Spa, Colchester, and the lowest on Bond Street in London. High street shops on Oxford Street in London had a prime yield of *** percent.

The prime yields in the UK expanded across most property types between 2022 and 2025. In April 2025, yields were the lowest in the London West End offices market at *****percent. In contrast, shopping center yields stood at ****percent. Yield is an indicator for the expected return of a property investment and is calculated as the ratio of rental income and the property value. Several factors can drive yields - increased demand could raise property values, causing lower yields, while a fall in demand could create the opposite effect. Which is the largest commercial real estate sector in the UK? Office real estate has traditionally accounted for the lion’s share of the commercial property investment market, but since the start of the COVID-19 pandemic, investors’ interest has shifted towards industrial real estate. With the e-commerce sector growing and supply chain management becoming more important than ever, so has the industrial and logistic sector. This increase in importance is also reflected in the occupiers market, with the annual take-up exceeding the ten-year average for three years in a row. How is the commercial property market expected to develop in the coming years? The industrial and logistic property market is forecast to outperform retail and offices in terms of capital value growth in the period between 2025 and 2028. According to the same forecast, rental growth is expected to turn positive for all property types in 2025, except for shopping centers.

Yields measure the amount the expected income on investments made as a percentage. Yields consider the cost of buying a property, it’s running costs and the income generated through renting the property. Yields grow or decrease based on occupancy rates of the area and industry as well as demand and confidence. In 2019, prime yields for office property in London fell below **** percent. Outside of London, prime yields in the United Kingdom ranged between **** percent and *** percent.

Prime office rents

Prime rents for office space in London are higher than the rest of the United Kingdom. The cost of rent varies due to a few factors including area, grade of property, amenities provided, and average area costs.

Vacancy rates lower than 10-year average

Compared to the ten-year average, vacancy rates in the capital of England were low. Areas such as the South Bank had vacancy rate of *** percent during 2019, which in turn is likely to further drive the cost of rent.

This statistic illustrates the value of average monthly residential rents in European cities in 2018, in euros per square meter. It can be seen that London yielded the highest rents at **** euros per square meter, this was followed by Edinburgh and Dublin at **** euros per square meter and **** euros per square meter respectively. Comparatively, Berlin and Vienna had average residential rents of *** euros per square meter and *** euros per square meter.

In the first quarter of 2025, London West End - Bond Street was the most expensive location for prime high street rents in the UK, with prices reaching 2,500 British pounds per square foot. The West End was ranked ahead of London City, which came in third. In Manchester, the annual costs of rental per square foot of prime retail real estate amounted to 235 British pounds. Retail warehouses Retail warehouses typically range from 50,000 to hundreds of thousands of square feet. They are used for keeping and distributing inventory. Retail warehouses include loading docks, truck doors and large parking lots; also, they may contain a limited amount of office space. Prime retail warehouse properties belong to the wider category of industrial property, along with other real estate types, such as distribution buildings, showroom facilities, manufacturing buildings, cold storage facilities, telecom or data hosting centers, "flex" buildings denoting more than one industrial or commercial facility housed in the same building, and finally R&D buildings. Prime yields of high street retail across Europe Retail real estate prime yields in Europe were the lowest in Zurich, Switzerland, and the highest in Bucharest, Romania in 2025. As could be expected, larger cities in Europe tended to produce lower yields, due to the lower risk associated with these markets. Locations with lower yields tend to have steady occupancy rates and rental growth.

The price of prime office space in London differs significantly based on location. More central areas, including the West End, Marylebone and Knightsbridge, tend to have prime rents more than double the cost of areas on the outskirts. London office rents - most expensive in Europe When placing London alongside other major cities in Europe, the West End area of London had annual prime rents over 800 euros per year higher than Paris. In the United Kingdom (UK), average rental costs in the capital fair outweigh those of other areas. Outside of London, the major cities saw prime office rents ranging between 26 British pounds per square foot and 39 British pounds per square foot. Prime Yields Prime yields assess the return on investment expected for commercial real estate. In 2023, prime yields ifor office real estate stood between 3.75 and 7.5 percent. During the same year, office prime yields in several other areas in Europe saw far greater returns on investment.

Since 2015, the gap between the cost of buying a home and renting has grown, with homeownership becoming increasingly less affordable. In the ***** ******* of 2024, the house price to rent ratio in the UK stood at *****. That meant that house price growth has outpaced rental growth by nearly ** percent between 2015 and 2024. The UK's house price to rent ratio was slightly below the average Euro area ratio. House price to income ratio in the UK Another indicator for housing affordability is the house price to income ratio, which is calculated by dividing nominal house prices by the nominal disposable income per head. The ratio saw an overall increase between 2015, which was the base year, and 2022. After that, the index declined, but remained close to the average for the Euro area. Is it more affordable to rent or buy? There are many things to be considered when comparing buying to renting, such as the ability to qualify for a mortgage and whether prospective homebuyers have sufficient savings for a deposit. Generally, purchasing a home is more affordable than renting one. However, the average monthly savings first-time buyers can achieve have been on the decline. In East of England, where house prices have increased rapidly over the past few years, it was cheaper to rent than to buy in 2022.

The cost of rent for office space in London is the highest in Europe. In the fourth quarter of 2023, the West End had average rents per square foot of *** British pounds. The average annual rent in London for prime office space was substantially higher than in any other European market. Prime yields For commercial real estate investors, prime yields in London averaged **** percent in 2023. As compared to the rest of the United Kingdom, yields for prime office space in London were notably lower. Commercial investments Office real estate, which comes under the broader term of commercial real estate, traditionally accounts for the lion's share of commercial real estate investments. In recent years, however, this share has been gradually declining. Despite this trend, the UK is one of the leading office real estate investment markets in Europe.

The industrial real estate sector and West End offices are forecasted to see the highest annualized rental growth in the UK between 2025 and 2029, followed by city offices. According to the forecast, industrial real estate and West End office space rents are expected to grow by *** percent per year in this period, while city office space rents are expected to increase by *** percent. When it comes to total commercial real estate returns in the UK, the industrial and shopping center sectors are forecast to outperform all other property types.

In May 2024, Greater London recorded an average void period of ** days, reflecting a slight increase from the previous months. This places London among the regions with shorter void periods, while the West Midlands experienced a longer average of ** days. Understanding the trends of void period lengths could enable a landlord plan accordingly to minimize the impact on their expected income through careful cost planning and budgeting. According to landlords, the demand for rental properties has increased significantly.

Across the major European industrial and logistics real estate markets, London had the highest rental rate in 2024. One square meter in a large, prime warehouse in London cost about *** euros annually in the fourth quarter of the year. That figure reflects the rental cost after any rent-free periods or incentives, excluding taxes and charges, referred to as headline rent. Other markets with high rental rates were Helsinki and Oslo. What are the most important logistics hubs in Europe? London’s domestic and international connectivity, thriving business ecosystem, and access to a large consumer base make it one of the most important logistics hubs in Europe. Nevertheless, Birmingham achieved the highest take-up among the major European markets for three years in a row. Birmingham is part of the UK’s golden logistics triangle – an area between Birmingham, Northamptonshire, and Yorkshire that, due to its central location, is within a four-hour drive from ** percent of the British population. Unsurprisingly, Europe’s three largest economies (the UK, Germany, and France) had the most active logistics investment markets. Combined, the three countries accounted for more than half of the total investment value in the sector. How profitable is warehouse investment in Europe? One of the key metrics for measuring the profitability of an investment is yield, or the rental income generated by the property as a percentage of its price. In Europe, yields for prime properties reached up to ***** percent, but some markets, such as France and Germany, experienced much lower yields. Though low yields can be interpreted as low profitability, they are usually a sign of strong market fundamentals and sentiment. In conditions of economic growth and steady occupier demand, investors can expect rental and capital growth and are more willing to accept lower yields. On the other hand, when the macroeconomic conditions deteriorate, economic growth slows down, and borrowing costs increase, investors address the higher risk through higher yields.

Commercial real estate in the UK is expected to see an annualized total return of *** percent between 2025 and 2029. During that period, capital values are forecast to grow faster than rents. Within the sector, shopping center, industrial, and retail warehouse real estate stands out as the commercial property type with the highest total returns.