Ready to become a landlord and want the biggest return on your investment? Or perhaps you already have an established portfolio and are looking to expand, considering new locations for the best rental yields.
Either way, understanding rental yields is crucial, and some of the top hotspots might surprise you.
What is Rental Yield, and How is it Calculated?
Rental yield (%) is the annual return on investment from renting out a property, based on the original purchase price of the property. For example, if you bought a property for £250,000 and rented it out for £1,200 per month, over a 12-month period, your annual rental yield would be worked out as follows:
(£14,400 / £250,000) x 100 = 5.76%
(Annual rent / property price) x 100 = gross rental yield (%)
Top Regions for High Rental Yields
The North East of England offers some of the highest rental yields in the UK. With lower property prices and rents, the region boasts an average yield of 7.65%, much higher than the national average of 5.60%. It’s really no surprise that seasoned investors are extending their searches further up the country.
| Region | Average gross rental yield | Average monthly rent | Average price of a buy-to-let property |
| North East | 7.65% | £695 | £109,072 |
| Scotland | 7.48% | £793 | £127,284 |
| North West | 6.66% | £848 | £152,719 |
| Wales | 6.43% | £881 | £164,388 |
| Yorkshire and the Humber | 6.38% | £799 | £150,261 |
| Northern Ireland | 6.11% | £735 | £144,423 |
| West Midlands | 5.95% | £905 | £182,531 |
| East Midlands | 5.84% | £860 | £176,730 |
| South West | 5.37% | £1,077 | £240,472 |
| South East | 5.34% | £1,325 | £297,971 |
| East of England | 5.28% | £1,163 | £264,539 |
| London | 4.93% | £2,121 | £516,295 |
Source: Zoopla
Top 10 Cities for High Rental Yields
Certain areas in the North East region offer exceptionally high rental yields, with Sunderland leading at an impressive average of 8.96%. Take a look at the top 10 UK cities boasting the highest rental yields:
| City | Average gross rental yield | Average monthly rent | Average price of a buy-to-let property |
| Sunderland | 8.96% | £626 | £83,842 |
| Aberdeen | 8.03% | £689 | £102,920 |
| Burnley | 8.00% | £566 | £84,869 |
| Dundee | 7.96% | £774 | £116,690 |
| Glasgow | 7.95% | £951 | £143,617 |
| Middlesbrough | 7.92% | £613 | £92,862 |
| Blackburn | 7.52% | £661 | £105,460 |
| Hull | 7.45% | £612 | £98,617 |
| Newcastle | 7.45% | £833 | £134,245 |
| Liverpool | 7.44% | £801 | £129,172 |
Source: Zoopla
While rents and property prices have steadied slightly, the demand for rental properties remains high with some letting agents still seeing up to 15 enquiries for every rental home on the market, suggesting rental yields will remain strong throughout the year. By considering these hotspots, you can make informed decisions and potentially achieve higher returns on your investment.
