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Firstly, What is a Good Rental Yield?
The potential return on your investment generated from rent is known as the rental yield. To calculate the percentage yield is easy. Firstly, you need to know the annual rental income of your property. Secondly, divide this value by the purchase price of the property. Alternatively, you can use our rental calculator to help you determine the potential rent of your property.
The UK has an average rental yield of 3.63%. Therefore, any city generating yields higher than 3.63% will be considered a good-yielding city. Northern postcodes offer the best rental yields than the national average. Property Data has analysed thousands of postcode districts, and in this article, you can see the Top 5 Highest Yielding Cities – perfect for buy-to-let investors.
There is no surprise that Manchester often nicknamed the ‘New London’, generates some of the best rental yields in the country. The city is roaring with myriad job prospects and a thriving student scene. Manchester is one of the largest university cities in the UK with five universities. Therefore, levels of demand in Manchester, although elevated, are sustainable.
Many investors are keen to invest in this Northern Powerhouse, which is the biggest economic area outside of London. The city has generated record-high rents of £856 PCM, on average. There is no indication that the market will dip any time soon.
Property prices will continue to increase due to population growth, an expanding student population and the extensive regeneration schemes underway. As a result, this will positively impact the capital appreciation of a property. Manchester is also home to MediaCityUK, the fastest-growing centre for tech and media. Oxford Economics predict Manchester to have the highest economic growth over the next five years, with a GVA growth rate of 16.4%. Interestingly, this is the highest in the country. The strengthening economy will have a positive influence on the property market.
ManchesterZoopla Rental Report 2022
14.3%Annual Rental Growth
£856Average Rent PCM
The property market in Bradford is one of the most affordable in the UK which is why many investors are drawn to the city. Property prices here are exceptionally reasonable at £146,367 on average. To compare, the average property price in the UK sits at £312,201 (Zoopla). As a result of low property prices and high tenant demand, rental yields in Bradford are excellent. Bradford, newly awarded Capital of Culture 2025, is on track for substantial economic growth and capital appreciation. Furthermore, the city will soon receive additional public investments and private funding. Major regeneration schemes continue to revitalise the area.
The vibrant and cultural city sits between Leeds and Manchester, the major Northern cities. Due to its proximity to the motorway, train stations, Leeds & Bradford Airport and Manchester Airport, residents can travel conveniently by road, rail and air.
BradfordZoopla Rental Report 2022
10.8%Annual Rental Growth
£539Average Rent PCM
Demand for rental properties in Leeds continues to intensify, this is evident with the 11.5% annual rental market growth. The shortage of houses available has pushed many people into renting. Therefore, creating the optimum conditions for landlords as it propels property prices and rents on an upward course. Over the next five years, property prices in Leeds are forecast to rise by 21.6%. Leeds benefits from a high influx of rental demand from young professionals which is forecast to grow. The UK’s first infrastructure bank will be situated at the heart of Leeds. The bank will channel billions of pounds to large-scale projects and will also help tackle climate change.
In addition, the largest city centre project, Leeds Southbank, will double the size of Leeds city centre. The £210m project, the £500m Leeds train station upgrades, and the £250m Climate Innovation District will create an abundance of jobs in the city. Consequently, boosting the economy. The plans will draw new possibilities for young working professionals, raising employment rates in the area.
LeedsZoopla Rental Report 2022
11.5%Annual Rental Growth
£792Average Rent PCM
The regeneration strategies in place for the next decade will transform Birmingham. The Big City Plan will create over 50,000 new jobs in the city. In addition, the Commonwealth Games will act as a stimulus for strengthening the economy. The Games can bring £1bn worth of economic benefits to any hosting city. Previously, the city of Manchester saw incredible city centre growth after hosting the Games in 2002. Birmingham will soon benefit from the tourism industry and amplified job prospects.
Furthermore, the HS2 will immensely benefit the property market of Birmingham as it transforms the city into a commuter hotspot. Once implemented, it will only take commuters 38 minutes to travel to London. Property prices in Birmingham are much lower than in London, £214,696 vs £648,942. Therefore, the London exodus will continue as more people look to move to a cheaper alternative to living in the Capital. The city is known to deliver exceptional returns and some of the best rental yields. The city has an impressive graduate retention rate of 50%. In addition, over 60% of the population is under 35.
BirminghamZoopla Rental Report 2022
13.7%Annual Rental Growth
£767Average Rent PCM
Nottingham is home to the University of Nottingham and Nottingham Trent University. Accordingly, the city benefits from a considerable student population, driving tenant demand. It is also home to the largest teaching hospital in the UK, the Queens Medical Centre. QMC employs 6000 workers, creating significant demand for housing from skilled professionals.
Subsequently, the city has some of the best rental yields in the UK at an astonishing 11.30%. Landlords are fortunate to be surrounded by high-quality tenants, including those working at the headquarters of Boots and Experian positioned in Nottingham. The Boot’s Enterprise Zone is a new £8m project which aims to drive innovation in the city.
NottinghamZoopla Rental Report 2022
13.0%Annual Rental Growth
£797Average Rent PCM
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