Rental Yields in the South West

The South West in 2025-26 gives you mid-4% regional yields, 6-8% in Bristol and a few pockets, and a holiday-let sector that just lost its FHL tax perks.

Prices, rents and headline yields

Regional picture

A 2026 yield table puts the South West at:

ONS rent data shows England-wide rents up 4.0-5.0% year-on-year through late-2025 into early-2026, with the South West close to that national average.

Worked example: typical South West single let

Use the regional averages:

• Price: GBP 310,000.
• Rent: GBP 1,200/month.
• Mortgage: 65% LTV, GBP 201,500 at 4.5% interest-only.

Gross yield:

1,200 x 12 = 14,400. 14,400 / 310,000 = approximately 4.65%.

Annual costs:

• Management (10% + VAT): ~GBP 1,728.
• Maintenance/compliance: ~GBP 800.
• Insurance: ~GBP 300.
• Voids (2 weeks): ~GBP 553.
• Non-finance total: ~GBP 3,381.

Net before finance:

14,400 - 3,381 = GBP 11,019. Net yield before finance: 3.6%.

Finance:

Interest: 201,500 x 4.5% = approximately GBP 9,067.

Net after finance:

Profit: ~GBP 1,952/year. Net yield on purchase price: 0.6%.

On ~GBP 100,000-105,000 cash in, that is ~2% cash-on-cash.

So on average stock you are in London-style cashflow territory, just with lower absolute prices.

City yields and the "Bristol effect"

A 2026 location comparison gives precise numbers for several South West cities:

Key points:

• Bristol: ranked with top gross yield 8.2%, supported by a big student and professional market.
• Gloucester: 6.3% top yield at lower entry price.
• Exeter and Plymouth: 5.6% top yields, with Exeter more expensive.
• Rural / county-wide Wiltshire is 4.4%.

Bristol yields in more detail

A 2026 Bristol yield analysis states:

• Gross yields range from around 4.5% for large detached houses up to 7%+ for well-located studios and small flats.
• Average monthly rent across Bristol: ~GBP 1,777 in the 2026 league table.

So the "Bristol effect" in numbers:

• Strong rent levels.
• 4.5-5.5% on typical family houses.
• 6-7%+ on smaller units or optimised stock.
• Top-end deals at 8% in specific postcodes on that 2026 ranking.

HMO yields in key South West cities

HMO stats are pulled from BTL tables and national HMO data:

Typical 2025-26 ranges:

Nationally, "well-run HMOs in strong cities" are flagged as giving 9-15% gross yields in the best North/Midlands spots. In the South West the realistic range is 7-9% gross, 5-6.5% net before finance, once you add utilities, licensing and management.

Exeter, Plymouth and others: single-let examples

Exeter is a good worked example:

• 2026 local analysis: average private rent in Exeter hit GBP 1,319 in Jan 2026, up 3.7% year-on-year.
• BTL table: Exeter avg price GBP 387,814, rent GBP 1,284, top yield 5.6%, 30% deposit GBP 116,344.

Gross yield on that base:

1,284 x 12 = 15,408. 15,408 / 387,814 = approximately 4.0% on the raw average stock.

The 5.6% is the top-quartile BTL-type stock.

Plymouth:

• Price GBP 282,189, rent GBP 1,002, top yield 5.6%.
• Cheaper entry, similar top-yield figure, more working-class and student mix.

Short-let yields and FHL abolition: Cornwall / Devon / Bath / Cotswolds

FHL abolition

The big structural change:

The Furnished Holiday Let (FHL) tax regime was abolished in April 2025. From April 2025, short-term holiday lets are taxed the same as standard residential lets:

• No more special capital allowances.
• No more beneficial treatment for mortgage interest.
• No more separate FHL CGT reliefs.

Several South West holiday-let agencies now warn:

• You still get normal landlord reliefs (repairs, agents, etc.).
• But the tax advantage vs long-term lets has gone.

What this means for yields

On the ground:

• Gross short-let yields in Cornwall, Devon coast, Bath and Cotswolds can still be high: 8-12% gross on revenue is common on well-run holiday cottages in strong locations.
• But: seasonality, higher cleaning, utilities and marketing costs, and now no tax edge vs long-term lets.

Regional market updates for Devon and Cornwall in early 2026 show:

• Average rents around GBP 1,302/month across Devon and Cornwall in Jan 2026, down 1.1% month-on-month but still up year-on-year.
• Local agents note some landlords exiting the short-let market or switching to longer ASTs because the FHL numbers no longer stack in the same way.

You should now underwrite Cornwall/Devon holiday lets as:

• Operational businesses with lumpy cashflow, not tax-favoured investments.
• Sensible net yields of maybe 4-7% after all costs and tax, depending on booking levels and mortgage costs.

Capital growth and Bristol-led demand

Regional yield stats show the South West in the mid-pack for yield but strong on growth:

• Average South West price GBP 310,480, five-year growth around mid-teens % depending on sub-region.

BTL tables explicitly say:

• South West yields are led by Bristol at 8.2% and Bournemouth at 7.7%.
• "After that, yields drop. Popular tourist areas like Bath and Exeter sit below the 5.8% national average because purchase prices are pushed up by lifestyle buyers, not investor maths."

ONS rent data:

• UK average rent GBP 1,374 in Feb 2026, up 3.5% year-on-year.
• South West sits near that mean: rents have risen solidly but not at the extremes like North East.

"Bristol effect" in words:

• Strong job market (creative, tech, aerospace, services).
• Serious student presence.
• Tight planning and limited supply.
• Result: high prices, high rents, mid-to-good yields on carefully chosen stock, and strong long-term growth.

Tenant demand and voids

Demand is very strong in the main South West cities and tourist spots:

Bristol: City is near the top of UK yield rankings, with 8.2% top yield and GBP 1,777 average rent. Voids are often under 2 weeks, sometimes a few days between tenancies on good stock.

Exeter: Average rent GBP 1,319, up 3.7% in a year, with commentary that rent growth is outpacing sales price growth.

Devon and Cornwall: Regional report notes average rent GBP 1,302/month in Jan 2026, with three consecutive monthly falls (seasonal), but robust year-on-year trend.

Void guidance:

• Core cities (Bristol, Exeter, Plymouth, Swindon, Gloucester/Cheltenham, Bath): 1-3 weeks void per year once stabilised.
• Coastal / rural Cornwall, Devon, Dorset:
• Long-term lets in strong towns: similar 2-3 weeks.
• Weak or highly seasonal locations: assume 4-6 weeks or rely on short-let volatility.

Tenant profile:

Mix of students, young professionals, public-sector workers and tourism-linked employment. "Lifestyle buyers" and retirees also drive owner-occupier demand, which pushes up prices and compresses yields around Bath, Cotswolds, parts of Devon and Cornwall.

Best postcodes and hotspots

From the 2026 South West section and city-level sources:

Bristol

Stronger-yield postcodes:

• BS2/BS3/BS4 (central and south Bristol terraces).
• BS7/BS16 (north Bristol, student and young professional areas).
• Investropa and similar analyses highlight studios and small flats in these postcodes above 7% gross, with larger houses nearer 4.5-5.5%.

Gloucester

BTL table: avg price GBP 293,930; rent GBP 1,215; top yield 6.3%. Worker-led city with cheaper entry than Bristol and good motorway links.

Exeter

EX1-EX4 for student/professional stock. 2026 agent guide stresses that Exeter rents are now outpacing sales prices, supporting yields where many South West cities see compression. Top BTL yield 5.6%.

Plymouth

City centre and student/port areas PL1-PL4 produce 5-6%+ yields on properly bought stock.

Swindon

Rail/industrial hub on the M4 with HMO potential around 7-8% gross, and single-lets in the 5-6% range.

Bath, Cheltenham, Cotswolds

Yield-poor, growth-and-lifestyle-rich. You are looking at 3.5-4.5% gross, sometimes worse, due to lifestyle buyers paying more than investors would.

Licensing and regulation

Licensing is more patchy than London but still relevant:

Bristol: Multiple selective licensing areas. Additional HMO licensing on top of mandatory schemes in many wards.

Plymouth, Exeter, Gloucester, Swindon: Mandatory HMO licensing. Some selective schemes and additional licensing where PRS quality is poor.

Bath and North East Somerset, Cotswold towns: HMO licensing in student and multi-let areas. Increasing scrutiny of holiday lets and Article 4 directions in some locations.

Typical licence fees: GBP 700-1,200 per property for 5 years, more for larger HMOs, plus compliance works. You must include this in HMO and some single-let numbers.

Key risks in the South West

Lifestyle-driven yield compression Bath, Cotswolds, coastal Cornwall/Devon: purchase prices are driven by second-home and retiree demand, not yield. BTL tables explicitly say Bath and Exeter sit below the 5.8% national yield average because lifestyle buyers push up prices.

FHL abolition and holiday-let over-supply FHL tax perks ended April 2025. Many forums still talk about "tax-efficient holiday lets", which is now wrong. Operational risk: earnings are seasonal and volatile, finance is more expensive for holiday-let products, and you no longer have a tax regime offsetting that operational risk.

Reliance on tourism and seasonal jobs Cornwall, Devon, Dorset and parts of Somerset: exposed to tourism, hospitality and seasonal low-paid work. In a downturn, arrears and voids can spike, especially on fringe stock.

Bristol price risk The "Bristol effect" pushes yields on average houses down even as top-end yields stay high on small units. If prices pause while rates stay high, 4.5-5% gross on a house can feel very tight.

Regulatory and political risk around short-lets Growing pressure to regulate holiday lets more aggressively (planning use-class changes, registration schemes). If you rely on Airbnb-level rates to make the numbers work, you are exposed.

What forums get wrong about the South West

"Cornwall holiday lets are still tax-efficient and unbeatable." The FHL regime is gone from April 2025; short-lets are now taxed like any other residential property. You still might get high gross yields, but the tax edge has disappeared.

"Bristol is too expensive; yields are awful now." On average family houses yields are mid-single-digit, yes. But top BTL data still shows Bristol at 8.2% gross, with studios/smaller units hitting 7%+ in the right postcodes. The city is not "dead" as a BTL location, you just need sharper deals.

"Exeter and Bath are safe bets on yield as well as growth." 2026 analysis is blunt: Bath and Exeter sit below the 5.8% national average yield because lifestyle buyers push up prices. Exeter's rent growth is currently outpacing sale prices, which helps, but it is still not a high-yield market.

"You can treat South West HMOs like northern HMOs." Typical HMOs in Bristol/Plymouth/Exeter yield 7-9% gross, not 12-15%. Licensing and Article 4 directions plus higher entry costs shrink the net premium.

"Devon and Cornwall long-term lets are low risk because everyone wants to live there." Demand is strong in key towns, but the local wage base is lower and more seasonal, so affordability is tighter. In weaker coastal villages, voids and arrears can be worse than in some "ugly" northern towns.

How to underwrite South West BTL in 2025-26

Standard single lets:

• Assume 4.5-5% gross region-wide.
• Allow 5.5-8% gross only in clearly identified hotspots like Bristol, Gloucester, the right bits of Plymouth/Swindon/Bournemouth.
• Build in:
• 10-12% management.
• GBP 800-1,000/year maintenance/compliance.
• 2-3 weeks void in cities, 4-6 weeks in weaker coastal/rural areas.

HMOs in Bristol / Plymouth / Exeter / Gloucester / Swindon:

• Model 7-9% gross, 5-6.5% net before finance.
• Include licensing, full-bills, and capex for fire/safety.

Holiday lets in Cornwall/Devon/Bath/Cotswolds:

• Ignore historical FHL tax perks; treat them as businesses taxed like other lets.
• Underwrite on:
• Conservative occupancy and ADR.
• Realistic cleaning, OTA, utilities and maintenance costs.
• Net yields that may end up 4-7% even when gross is 10%+.

If your main goal is income, your next deposit likely goes further in the North or Midlands. If you want a mix of lifestyle, long-term growth and solid tenant demand, then carefully chosen South West stock can still make sense.

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