Construction Insights

The top UK cities for profitable rental yields in 2021

By 4th January 2022No Comments

The first thing you’ll probably notice is all of these most profitable buy-to-let and build-to-let cities are in the north. The second thing you’ll notice is how much choice and potential there is. The rental market has remained strong despite Covid-19 and these are the most profitable cities you need to know about. 

Which regions should investors focus on?  

Before we break it down into specific cities, it’s important to get to grips with a broad map of rental yields throughout the UK and how they compare. According to property investment company SevenCapital, these are the rankings: 

 

  Average monthly rent  Average yield 
North West England  £790  4.41% 
Yorkshire & the Humber  £697  4.33% 
Scotland  £687  4.11% 
Wales  £698  3.99% 
East Midlands  £704  3.80% 
West Midlands  £755  3.60% 
South West England  £943  3.44% 
North East England  £560  3.34% 
East England  £1,001  3.22% 
South East England  £1,095  3.10% 
London  £1,583   2.90% 

Average rental yields for 2021. Data from SevenCapital https://sevencapital.com/uk-property-investment/best-rental-yields-uk/  

In general, regions with higher prices produce a lower average yield (apart from some anomalies like the North East). The North West produces the best profits in part because the average house price is £214,767, while London, where the average property price is £648,942, produces the lowest rental yield.  

Sunderland – 7.27% annual rental yield 

Data from Address Intelligence shows Sunderland buy-to-let investors can earn back 7.27% in their first year. This flourishing rental market has been attributed to regeneration in the city centre, constantly improving job opportunities for residents and its large student population. 

Hull – 7.2% annual rental yield 

Historically, Hull hasn’t been considered a hotspot for very much, but job opportunities in renewable energy and £220 million in investment has turned the maritime city into a promising prospect for landlords. Tenant demand is high, resulting in rental yields of up to 7.2% in 2021.  

Manchester – 6.6% annual rental yield 

31% of Manchester’s population rents, giving annual yields of 6.6% in 2021. The city’s built-to-rent market is the largest outside of London, graduates often stick around and live in the city after completing their degree, and large companies are moving many of their offices and headquarters to the city attracting long-term employment. All of this combined makes it a landlord or property investor’s dream. 

Liverpool – 6.3% annual rental yield 

The average property price in Liverpool is £182,534 and some regions of Liverpool offer rental yields of up to 10%. Six of the top 25 best rental yield postcodes in the country are in Liverpool so there’s a huge amount of choice for potential investors and developers. 

Sunderland – 5.4% 5-year average annual rental yield 

The second city in Sequre Property Investment’s 5-year average rankings is Sunderland and it’s definitely on the up. Investment in ‘Enterprise Zones’ has brought much needed employment, a new medical school has increased the student population, and its proximity to the rest of the North East makes it a popular commuter city. 

It’s a good time to invest in property in the north!

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