29 Mar 2023
Looking to invest in UK property but don’t know which areas offer a good return on investment?
You may want to start by looking at the rental yields from different areas.
Rental yield is the amount of money an investor could earn from renting a property. It's a percentage that is calculated by using the property's value and annual rental income, and represents how much of the overall property price can be earned in rent in one year.
Rental yield is a metric that landlords and investors use to evaluate the value of their investment properties.
Although rents are the highest in London according to the ONS, the equally high property prices make the overall rental yield less profitable for investors than many other UK destinations.
If these locations are popular with certain groups who may not yet own properties, such as students and young professionals, they can offer rental opportunities to potential landlords. Having universities and good commuter links can increase the likelihood of these towns and cities having lots of renters.
Based on research from rental search engine Zoopla, here are some examples of areas with high yields for investors considering a UK rental property:
The city of Liverpool has a population of around half a million people, including roughly 50,000 students at 3 different universities, making demand for student rental properties high. Some of the multi-national companies with bases in Liverpool include Jaguar Land Rover, Unilever and AstraZeneca.
Nottingham has a large student population from two universities: the University of Nottingham and Nottingham Trent University. The city is also home to the largest teaching hospital in the UK, as well as the offices of major corporations such as Boots, E.ON and Experian.
Coventry has been named the UK City of Culture from 2021 to 2025. It’s a short drive to the UK’s second city Birmingham, and the train to London takes less than one hour, making it perfect for commuters. It’s also a popular home to students from Coventry University as well as the University of Warwick.
Burnley is a town north of Manchester, with a direct train link taking 45 minutes from the town centre to Machester Victoria station. Another nearby town with a high average rental yield that you may want to consider if you’re looking to build your portfolio is Hyndburn, with a rental yield of 6.98%.
The historic and picturesque city of Peterborough is north of Cambridge but still only a 50-minute train from central London, making it an ideal commuter town. Similar commuter locations with high rental yields within an hour of London include the town of Swindon and the London suburbs of Dagenham and Bexley.
Sunderland is a port town on the north-eastern coast of England, a few miles from Newcastle. Two huge companies with bases in Sunderland include Nissan and Arriva, and it’s just one of a number of towns in the North East with high rental yields and low property prices, including Hartlepool (7.64% rental yield) and Middlesborough (7.61% rental yield).
Southampton is a thriving town on the south coast. It’s an hour and a half from London and directly linked by the M3, giving it excellent commuter links. Southampton is also home to over 20,000 students, creating a large demand for rental properties.
Property finance from Nomo can help you to buy a rental property in England and Wales if you don’t have enough cash to buy it up front. With finance from Nomo, you can invest in the UK property market and begin building an international property portfolio.
Find out more about Nomo Property Finance here.
The information provided is of a general nature and is not a substitute for advice specific to your circumstances. Nomo and its affiliates do not provide tax, legal or accounting advice and you should consult your own advisors before engaging in any transaction.
Nomo Property Finance is only available for properties in England and Wales.
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