Rental Yields in the East Midlands

The East Midlands in 2025-26 is a mid-yield, mid-growth region: you are mostly looking at 4-6% gross in the big cities on averages, with sharper deals and HMOs stretching higher in Nottingham and some Nottingham/Derby/Leicester postcodes.

Snapshot: East Midlands yields 2025-26

• Region: Nottinghamshire, Derbyshire, Leicestershire, Lincolnshire, Northamptonshire, Rutland.
• City-level average yields (Q1 2026): Derby 3.7%, Leicester 3.3%, Nottingham 4.5% across all property types.
• "Top yield" investor tables show Nottingham as a Midlands standout with an average asking price GBP 242,667, average rent GBP 1,076 and top gross yield of 9.0%; 30% deposit about GBP 72,800.
• Another 2026 investment guide quotes:
• Nottingham: average price GBP 193,000, rental yields 4.59%, 10-year growth 47%.
• Northampton: average price GBP 261,000, yields 4.37%, 10-year growth 65%.

Prices, rents and headline yields by type

ONS data shows average private rents in England rising 3.6-4.4% in the 12 months to February 2026, with the East Midlands sitting around the middle of the English pack for rent growth and typical rent just below the England average of GBP 1,430.

Worked example: single-let terrace

• Price: GBP 180,000.
• Rent: GBP 875/month.
• Mortgage: 65% LTV (GBP 117,000) at 4.5% interest-only.

Gross yield: 875 x 12 = 10,500. 10,500 / 180,000 = 5.83%.

Annual costs:

• Management (10% + VAT): ~GBP 1,260.
• Maintenance/compliance: ~GBP 800.
• Insurance: ~GBP 300.
• Voids (2 weeks): ~GBP 403.
• Total non-finance: ~GBP 2,763.

Net before finance: 10,500 - 2,763 = GBP 7,737. Net yield before finance: 4.3%.

Finance: Interest: 117,000 x 4.5% = GBP 5,265.

Net after finance: Cash profit: ~GBP 2,472/year. Net yield on purchase price: 1.4%.

On ~GBP 70,000 cash in (deposit + costs) that is ~3.5% cash-on-cash.

So the East Midlands is not a "10% cash cow" region on standard stock. You buy it for balanced returns and growth, especially around Nottingham and Northampton.

City yields and HMO ranges

Single-let yields by city (2025-26)

HMO yields in key East Midlands cities

Realistic planning assumption for 2025-26 on a compliant HMO: 8-10% gross and 5.5-7% net before finance.

Capital growth: where the East Midlands sits

• A 2026 regional market update notes the East Midlands posting around 3.2% annual price growth in the most recent 12-month period, with Derby, Leicester and Nottingham leading within the region.
• Nottingham: 47% growth in the last 10 years on average prices.
• Northampton: 65% growth in 10 years, showing the impact of the commuter belt ripple from London and Milton Keynes.

Broad pattern:

• Last 1 year (2024-25): ~3-4% regional price growth, slightly below Yorkshire and Humber and North East but still positive.
• Last 3 years (2022-25): high single- to low double-digit cumulative growth in the main cities.
• Last 5-10 years: very strong longer-term growth in Nottingham, Leicester, Northampton, with more mixed results in deeper rural and coastal Lincolnshire.

You treat the East Midlands as a growth-supported region: you are not generally buying pure yield, you are buying decent yields with good long-term fundamentals.

Tenant demand and voids

Practical picture:

Nottingham / Leicester / Derby: Strong student and professional tenant bases. Voids often under 2 weeks per year in the right streets, but more competition in oversupplied student corridors.

Northampton: Tight rental market, commuter demand, voids often 1-2 weeks on properly priced stock.

Lincolnshire towns and coastal: More variable: some towns let fine, others have seasonality or weaker employment; voids can stretch to 4+ weeks if you buy in the wrong area.

For your numbers:

• Assume 2 weeks void in core city locations (Nottingham ring, Leicester, Derby, Northampton).
• Assume 3-4 weeks in fringe Lincolnshire / small towns.

Regeneration and infrastructure

Nottingham Broadmarsh and wider GBP 4bn regeneration

Broad Marsh is Nottingham's flagship regeneration: Homes England bought the 20-acre site from the council in March 2025.

The masterplan (part of a wider GBP 4 billion regeneration programme) includes:

• 1,000+ new homes.
• Up to 20,000 sqm of office, leisure and commercial space.
• Around 2,000 full-time jobs.
• A central "Green Heart" park where the shopping centre stood.

This underpins long-term demand and values around NG1/NG2.

Leicester Waterside

Leicester Waterside is a major mixed-use regeneration along the River Soar, focused on new homes, offices and public realm. A long-term driver of city-centre living and demand along key LE1/LE3 corridors.

HS2 East Midlands Hub at Toton

The original HS2 plans drove serious speculation in the Nottingham-Derby corridor. Even with HS2's later curtailment, the East Midlands HS2 Growth Strategy sets out plans for new housing and employment sites around Toton.

Position Toton as a partially-priced-in growth story, not a finished HS2 "jackpot."

Licensing and regulation

Nottingham: One of the more aggressive licensing environments. Large city-wide selective licensing schemes covering much of the private rented stock. Mandatory and additional HMO licensing in student and high-HMO areas.

Leicester, Derby, Lincoln, Northampton: Mandatory HMO licensing for 5+ occupiers. Additional and selective licensing in defined areas with high PRS concentrations.

Typical licence fees: GBP 700-1,200 per licence for a 5-year period in 2025-26, rising with property size.

Key risks

Over-optimism on Nottingham "9% yields": The 9% figure is a top gross yield on selected BTL stock, not the city average. City-wide yields are around 4.5-4.6%.

Student over-exposure: Heavy reliance on universities and PBSA competition. Article 4 and additional licensing restrict new HMOs.

Regeneration hype: Broadmarsh is real and funded, but not every NG7/NG11 terrace becomes growth stock.

Secondary Lincolnshire / small towns: Higher yields on paper but weak local economies and higher void risk.

Interest rate and tax squeeze: At yields of 4-5%, Section 24 and rate rises bite harder than in an 8% North East deal.

What forums get wrong about the East Midlands

"Nottingham is the next Manchester, 9% yields everywhere."

That 9% is the top gross yield per BTL index, not what you get buying any terrace near the tram. Real average yields are nearer 4.5-6%.

"Leicester/Derby are boring, no money to be made."

Both have solid economies and low voids. For some investors that is exactly what you want.

"Northampton is sleepy, no point vs Midlands cities."

65% price growth in 10 years, yields around 4.37% city-wide and hot postcodes like NN5 at 5.8%. Very much part of the London commuter ripple.

"Lincolnshire coastal towns are gems."

Some deals show 7%+ gross yields, but employment is thin and long voids or benefit-dependent tenancies can turn a spreadsheet win into a headache.

"Licensing in Nottingham is just a formality."

Nottingham's selective and HMO licensing is one of the strictest in the country. It materially changes your costs and tenant standards.

How to underwrite East Midlands deals

Core cities (Nottingham, Leicester, Derby, Northampton): Assume 4-6% gross on standard BTLs, 8-10% on HMOs. Build in 10-12% management, GBP 700-900/year maintenance, 2 weeks void.

Secondary towns / rural / coastal: Push yields to 6-7%+ if you have strong local intel. Assume 3-4 weeks void, more arrears risk, slower capital growth.

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