.jpg)
The Best Place to Invest in Property in the UK - Regional Insights
The fundamental factors you should consider when investing in real estate for rent are:
the monthly rent amount,
annual rent growth rate,
affordability, and
the average time required to rent.
Across the UK, London stands out for having the highest monthly rent at £2,053, which is notably pricier than any other UK region. Right behind are the South East at £1,254 and the East of England at £1,111, constituting the top three UK regions with high rent.
On the flip side, monthly rent in Yorkshire and the Humber is £758, £748 in Scotland, and £649 in the North East of England, and these regions showcase more budget-friendly rental options, providing some relief for local tenants.
Property value growth is highest in the West Midlands at 9.3%, North West at 8.9%, and East Midlands at 8.5%, while Northern Ireland and the East of England exhibit slower rates of 6.6% and 7.4%, respectively, making them areas with potentially low yields.
Affordability for single earners varies widely across regions. In London, the monthly rent would occupy a staggering 50.0% of the total income on average, making it tougher to manage housing costs alone.
However, regions like the North East, where the rent takes up 23.7%, Scotland at 24.1%, and Wales at 28.4%, offer relatively better affordability, which is why they have a significantly higher rental demand.
Regarding the average number of days to rent a property, Northern Ireland reports the longest rental period of 18 days, while renting a property in the East, the South West, or the South East of England would take you 12 or 11 days.
Discerning regional variations is the first step to your decision, so check out the complete overview of the rental market in the UK per region in the table below:
Region | Average Rent (PCM) | 3YR CAGR | Affordability (Single earner) | Days to Rent |
|---|---|---|---|---|
UK | £1,163 | 8.1% | 35.6% | 12 |
UK ex London | £958 | 8.0% | 28.5% | 12 |
East Midlands | £816 | 8.5% | 28.2% | 14 |
East of England | £1,111 | 7.4% | 32.8% | 12 |
London | £2,053 | 8.3% | 50.0% | 12 |
North East | £649 | 7.6% | 23.7% | 13 |
North West | £795 | 8.9% | 26.2% | 13 |
Northern Ireland | £744 | 6.6% | 28.0% | 18 |
Scotland | £748 | 8.2% | 24.1% | 13 |
South East | £1,254 | 7.5% | 34.5% | 11 |
South West | £1,016 | 8.4% | 32.1% | 11 |
Wales | £814 | 9.3% | 28.4% | 13 |
West Midlands | £852 | 8.0% | 28.9% | 13 |
Yorkshire and the Humber | £758 | 7.7% | 26.2% | 13 |
Now, let’s look at the areas with the highest rental yields around the UK.
Firstly, rental yield is the return on investment you will receive through rental income, and experts say the optimal yield is 6-8%. If you’re still having doubts about whether to buy or rent, you can use this calculator to compare potential costs.
This year’s reports reveal that Scotland is the most favourable location for buy-to-let investors, with West Dunbartonshire and Renfrewshire having the highest average gross yield of 9%.
You can expect a slightly lower yield of approximately 8.5% in the Scottish areas of East Ayrshire and North Lanarkshire, while the area with the lowest rent return on the list is Hartlepool at 8%.
Below is a complete list of UK areas with the highest rental yield:
Area | Average monthly rent | Average property price | Average gross yield |
|---|---|---|---|
West Dunbartonshire | £640 | £160,715 | 9.00% |
Renfrewshire | £678 | £189,236 | 9.00% |
East Ayrshire | £502 | £161,379 | 8.60% |
North Lanarkshire | £622 | £155,064 | 8.50% |
Sunderland District (B) | £582 | £156,593 | 8.40% |
Inverclyde | £634 | £165,034 | 8.40% |
Clackmannanshire | £670 | £181,276 | 8.30% |
Middlesbrough (B) | £586 | £114,191 | 8.20% |
Burnley District (B) | £521 | £125,714 | 8.10% |
Hartlepool (B) | £497 | £130,307 | 8.00% |
You should also keep in mind areas with the lowest average return on property investment in the UK.
With high monthly rent and even higher average property prices, London has proven to be the least favourite candidate for a lucrative ROI, with Kensington and Chelsea boroughs exhibiting an average gross yield of only 3.6%.
The situation is similar in the City of Westminster, where the average property price is an astonishing £1,812,237, but the average yield is merely 4.10%.
Meanwhile, Torridge and South Hams districts belong to the group with a 4.20% rental yield.
Look at the complete list of UK areas with low yields below:
Area | Average monthly rent | Average property price | Average gross yield |
|---|---|---|---|
New Forest District | £1,154 | £536,392 | 4.20% |
Richmond upon Thames London Borough | £2,061 | £972,571 | 4.20% |
South Hams District | £951 | £419,699 | 4.20% |
Torridge District | £757 | - | 4.20% |
Ryedale District | £736 | - | 4.10% |
Rutland | £878 | £419,851 | 4.10% |
St. Albans District (B) | £1,509 | £673,123 | 4.10% |
City of Westminster London Borough | £3,097 | £1,812,237 | 4.10% |
Derbyshire Dales District | £827 | £254,473 | 3.90% |
Kensington and Chelsea London Borough | £3,422 | £2,435,881 | 3.60% |
10 Best Cities to Invest in Property in the UK
Birmingham
Situated around 100 miles from London, the famously titled Second City is one of the most attractive locations for buy-to-let investors in 2023. It is growingly popular among young professionals and students attracted by its versatile socio-cultural scene.
Key points:
Average monthly rent: £1,232
Average rental yield: 6%
Average property price: £244,741
Rental growth forecast (2023-2027): 19.3%
Exhibiting favourable economic growth as the metropolitan centre of the West Midlands, the city’s demand for rental properties is very high. It is home to six universities and maintains a steady inflow of international students looking for accommodation.
The core of the market are two-bedroom apartments with a central location. The city has a robust transport network and expects a high-speed railway connection to London by 2035, which would significantly cut down job relocation expenses for frequent commuters.
In sum, close proximity to the capital and other major cities at a more affordable but no less vibrant location makes Birmingham one of the best areas to live outside of London, so be sure to look into property investment opportunities.
Bracknell
Another town near the capital in the South East region offering profitable property investment options, Bracknell is very popular for homebuyers and rental property seekers.
Key points:
Average monthly rent: £1,519
Average gross yield: 5.6%
Average property price: £411,997
Rental growth forecast (2023-20276): 19.1%
The so-called post-World War II New Town is swarming with tech companies and offers abundant job vacancies and a wide range of entertainment and dining establishments.
Another reason it became one of the top rental investment UK hotspots is its vicinity to London, making it a great option if your target demographic is young commuting professionals.
Bracknell is undergoing a large-scale regeneration process, further boosting rental demand and price increases. However, London’s average property prices still surpass Bracknell’s by 25%.
Leeds
Over in Yorkshire, Leeds is another investor hotspot for long-term and stable rental returns.
Key points:
Average monthly rent: £1,341
Average gross yield: 7.2%
Average property price: £247,824
Rental growth forecast (2023-2027): 14.2%
The main reason Leeds is one of the best places to buy a rental property is its flourishing rental market, ranking eighth on the list of highest rental growth areas of the UK according to the latest reports.
New employment opportunities and ample urban revitalisation projects put Leeds on the list of cities with the fastest-growing economy in the UK. No wonder there's been a twofold increase in people moving from London to Leeds over the past decade.
If you’re still not convinced Leeds is one of the best rental sites in the UK, we’ll leave you to think about the fact that as much as 73% of households in Leeds are currently up for rent.
Newcastle
Newcastle is the most populated city in the North East and the eighth largest city in the UK.
Key points:
Average monthly rent: £1,200
Average gross yield: 6.5%
Average property price: £221,796
Rental growth forecast (2023-2027):12.38%
If you’re considering New Castle for a property investment opportunity, the lets in the city centre have an average yield of 7.7%. Add this to the fact that Newcastle's average property price remains 33.6% below the UK average, and you’ve got yourself a steal.
While Newcastle faces challenges to actively build capital growth, the good news for you is the properties are still affordable, and their rental value will continue to rise.
Newcastle owes its steady rental value growth to a growing number of start-ups attracting new employees, which, in turn, drives the rental demand.
Liverpool
A contender from the North West area, Liverpool has a consistently growing property market, boosted by economic growth, regeneration developments, and high housing demand.
Key points:
Average monthly rent: £1,058
Average gross yield: 7.16%
Average property price: £177,224
Rental growth forecast (2023-2027): 15.9%
Exhibiting a robust property price growth of 42% over the course of five years, Liverpool is an affordable option as its average prices are 37% below the UK average.
Depending on the area, the Liverpool rental yield in the most populated areas is quite high, such as the so-called Baltic Triangle, with an annual yield of 8.1%, or L7 at 10%.
Moreover, the income-to-house price ratio in Liverpool is 4.9, which speaks of the affordability compared to the average income.
Finally, projects like Liverpool Waters drawing in new residents, tourists, and workforce are expected to drive the growth of the current rental market.
Nottingham
Moving on to the East Midlands, Nottingham is an unexpected member of this list, but you simply can’t miss out on one of the top places to live, as declared by the Sunday Times.
Key points:
Average monthly rent: £1,277
Average gross yield: 6.49%
Average property price: £193,780
Rental growth forecast (2023-2027): 35.4%
Nottingham has “affordable” written all over it, which is a great perk considering it’s a university town. The rental yield average in 2022 rose by 13%, surpassing the UK average of 11%.
Some up-and-coming areas in Nottingham you should consider are primarily student areas, such as Lenton, Dunkirk, and Radford. Property prices in these areas range between £175,000 and £220,000. According to some reports, you may achieve a yield of 8.89%.
Another Nottingham gem is the Queens Medical Centre, classified as a “super hospital”. The Centre has more than 6,000 employees, boosting the demand for rental.
Derby
Derby is a leading industrial and manufacturing centre, so it’s obvious why it’s on the list of the best places to buy-to-let in the UK.
Key points:
Average monthly rent: £836
Average gross yield: 4.4%
Average property price: £229,437
Rental growth forecast (2023-2027): 12%
As an industrial city, it houses the production and administrative facilities of several transport and manufacturing giants, such as Rolls-Royce, Bombardier Transportation, and Toyota Manufacturing UK, accounting for 45,000 jobs alone.
As if that wasn’t enough, 17 universities with 34,000 students are located at an hour’s drive. Moreover, almost half Derby's population is under 35, so rental opportunities are ample.
While the average rental yield for the whole city is 4.4%, properties in the City centre can make you a 6.1% yield. This young, vibrant, and the 6th most productive city in the UK is definitely an option worth the investment.
Sheffield
Another Yorkshire competitor, Sheffield, is the third most populated English district, with over 1.5 million inhabitants in the metropolitan area.
Key points:
Average monthly rent: £924
Average gross yield: 4.5%
Average property price: £244,682
Rental growth forecast (2023-2027): 11.5%
Sheffield’s two universities have a student base of 63,000, so the city has one of the best student rental yields in the UK.
Compared to last year’s 7% yield from properties in the city centre, the same area now yields 7.6% due to extensive investments in regeneration and the retail sector. Other high-yield areas are North Sheffield postcode areas S3 (7.6%) and S5 (6.7%).
Moreover, employment prospects are favourable as the Advanced Manufacturing Park Technology Centre predicts 70,000 new vacancies, making Sheffield an excellent option for rental property investments.
Glasgow
When looking into the best rental yields in the UK, we must mention Glasgow, the largest Scottish city with a metropolitan area populated by 1,84 million people.
Key points:
Average monthly rent: £1,141
Average gross yield: 6.73%
Average property price: £226,741
Rental growth forecast (2023-2027): 15.3%
Glasgow was among the first “European Capitals of Culture”, making it an attractive tourist location with a rich cultural scene and many large-scale events, such as the Commonwealth Games.
Glasgow is one of the best places for buy-to-let properties because it is the eighth city in the UK with the highest rental demand, with over 302 renters per 100 available rentals.
Glasgow saw a 136% property price increase over the past decade, and no wonder since it’s the 4th strongest and most profitable economy in the UK.
What’s more, residential property developments aim to double the total population by 2030, confirming that the Glasgow rental market will be one of the best markets to invest in.
Manchester
Manchester is the second largest UK economy, topped only by the Capital. This strength is reflected in the fact that Google, HSBC, and BBC have all chosen Manchester to set up their regional offices.
Key points:
Average monthly rent: £1,515
Average gross yield: 7.2%
Average property price: £238,861
Rental growth forecast (2023-2027): 21.6%
With a property price increase of 13% in the past five years, the rental yield in Manchester is highest in the Salford Quays (6.1%), Trafford (4.6), the City Centre (5.2%), and Chorlton-on-Medlock (5.7%).
Considering that the age demographic is a prominent rental market factor, 38.7% of the population is aged 18-35, and local universities bring 100,000 students in need of housing.
In fact, Manchester has designated student flats — Houses in Multiple Occupation (HMO) in Chorlton-on-Medlock. Since this is a good yield area, you might consider buying an HMO property for rent.
Additionally, Manchester is attracting a huge workforce with its amazing employment opportunities materialised in the numerous start-ups and large-scale regeneration projects expected to provide 65,000 jobs.
Conclusion
Looking to invest in rental property is always a wise choice and the return on investment can be more than satisfying. If you’re reading this part, you’ve studied our list of the best rental yields in the UK and you’re ready to make a decision.
Economic growth prospects, including educational, industrial and infrastructural developments are all important drivers of the rental property market, but let’s not forget large tourist and cultural centres drawing international tenants.
Hopefully, this article shed some light and answered your questions, preparing you for your grand entrance to the rental market.
.jpg)
.jpg)
.jpg)
.jpg)
