The Importance of High Yields

A good yield is often one of the most important aspects of choosing a buy-to-let property. Investing in an area that achieves high yields is far more important when an investor is looking to achieve a strong return on their investment. The best rental yields in 2023 are more likely to be found in the north of the country, in areas where rental prices are high and property prices are low. 

Calculating a rental yield for a property is easy. Firstly, calculate the annual rental income of the property. Then, divide that number by the total purchase price of the property. Alternatively, use the CityRise rental yield calculator, here. The average yield of UK property right now is 3.74%, meaning any property with a higher yield is considered a high-yielding property. 

Commuter Cities on the Rise

Do not underestimate commuter cities, as they are starting to increase in rental demand as the cost of living is lower for tenants. Cities such as Wakefield, Stoke-on-Trent, Burton-on-Trent, Doncaster, and Wolverhampton are seeing high levels of rental demand. This is due to their fantastic transport links to other key UK cities. 

The influx of tenants in these areas is strengthening local economies, allowing them to develop a healthier social infrastructure. This gives tenants quality of life improvements, such as enhanced amenities, business hubs and leisure activities. Properties in the centre of Wakefield can yield up to 7% but typically are expected to be around the 4.4% range. For investors with smaller budgets, commuter towns and cities are fantastic investments as they can offer strong returns at a lower cost.

6% Yields

Manchester

Boasting one of the strongest local infrastructures in the UK, Manchester property offers high-yielding property. Averaging 6%, Manchester property costs an average of £219,000, however, this cost is offset by average rental prices of a massive £928pcm. To put this into context, Manchester rental prices are more than £100pcm more expensive than those found in Birmingham. 

The high rental prices are due to high levels of rental demand in the city. This is because Manchester is one of the most multicultural cities in the world, with 153 languages spoken by residents. On top of this, businesses and top-tier amenities make it a growing hub for skilled professionals. Furthermore, the metro system in Manchester means property prices are more evenly distributed across the city as transport links make it easy for residents to live less centrally.

5.4% Yields

Liverpool

A thriving city of culture and business, Liverpool is forever evolving. The city’s latest changes come in the form of the Waterfront Regeneration, Knowledge Quarter, Central Park, and Anfield projects. These projects total investment of around £7bn, seeing the city attract tens of thousands of new tenants, creating new jobs and attracting more businesses.

On average, Liverpool property yields an impressive 5.4%. This is due to a supply-demand imbalance, which has raised both property prices and rental prices across the city. The average property in Liverpool currently stands at £221,000. However, the city has experienced a property price boom and is growing at up to five times the rate of London’s prices.