Where to Invest for the Best Rental Returns in the UK

We break down the highest-yielding property markets across the UK to help you make smarter investment choices.

Ready to become a landlord and want the biggest return on your investment?

It’s worth getting to grips with rental yield if you’re purchasing a buy-to-let property.

Gross rental yield is the annual rental income expressed as a percentage of the property price. Net rental yield also factors in the cost of maintaining and renting out the rental property. Both can help you decide if a property is a good investment.

The average gross rental yield in the UK is currently 5.8%. This is based on the average buy-to-let property costing £270,045 and the UK’s average rent being £1,301, according to our latest data.

Gross yields have improved across all regions in the last year as house prices have started to fall or remained the same while rents have continued to rise.

Keep in mind that tenant demand and the potential for house price growth - among other factors - should also be considered with property investment.

Top cities for rental yields in the UK

Sunderland, Aberdeen and Burnley top the chart for the highest rental yields in the UK, with average gross yields over 8%.

The top 17 cities for rental yields in the UK are all in the North of England and Scotland. In contrast, southern cities tend to have much higher house prices, bringing the gross yield down for buy-to-let properties.

Here’s how every city in the UK compares for gross rental yield.

City

Average gross rental yield

Average monthly rent

Average price of a buy-to-let property

Sunderland

9.3%

£659

£84,924

Aberdeen

8.3%

£734

£106,170

Burnley

8.2%

£634

£92,473

Dundee

8.1%

£809

£119,569

Middlesbrough

8.1%

£665

£98,697

Hull

8%

£669

£99,819

Blackburn

7.9%

£756

£114,527

Glasgow

7.8%

£1,012

£154,945

Grimsby

7.7%

£675

£104,837

Liverpool

7.7%

£870

£136,045

Newcastle

7.7%

£895

£140,184

Barnsley

7.3%

£734

£120,211

Stoke

7.2%

£774

£128,613

Doncaster

7.2%

£738

£123,134

Preston

7.2%

£861

£144,178

Blackpool

7.2%

£730

£122,374

Bradford

7.1%

£751

£126,363

Rochdale

7%

£912

£155,386

Swansea

7%

£896

£153,501

Wigan

7%

£834

£143,288

Bolton

6.9%

£885

£153,908

Birkenhead

6.8%

£794

£140,061

Wakefield

6.8%

£805

£142,108

Newport

6.8%

£949

£168,030

Gloucester

6.8%

£1,026

£182,242

Coventry

6.7%

£1,044

£186,172

Ipswich

6.7%

£945

£169,474

Nottingham

6.6%

£965

£174,905

Cardiff

6.6%

£1,147

£208,162

Southampton

6.6%

£1,180

£214,230

Manchester

6.6%

£1,144

£207,712

Huddersfield

6.6%

£755

£137,585

Mansfield

6.5%

£783

£143,529

Peterborough

6.5%

£961

£176,276

Sheffield

6.5%

£849

£156,740

Derby

6.5%

£860

£158,967

Medway

6.5%

£1,262

£234,559

Plymouth

6.4%

£912

£170,619

Portsmouth

6.4%

£1,195

£223,906

Birmingham

6.4%

£1,005

£189,056

Leeds

6.4%

£968

£182,238

Warrington

6.3%

£916

£174,092

Northampton

6.3%

£1,014

£192,912

Swindon

6.3%

£1,042

£198,283

Telford

6.3%

£893

£170,834

Luton

6.2%

£1,207

£232,533

Leicester

6.1%

£977

£193,490

Edinburgh

6%

£1,352

£270,147

Norwich

6%

£1,101

£220,097

Bournemouth

6%

£1,280

£256,514

Crawley

5.8%

£1,478

£305,389

Aldershot

5.8%

£1,382

£286,775

Hastings

5.8%

£1,061

£220,184

Belfast

5.8%

£820

£170,363

Worthing

5.8%

£1,204

£250,527

Milton Keynes

5.7%

£1,271

£268,744

Bristol

5.6%

£1,394

£300,381

Reading

5.5%

£1,429

£309,749

Brighton

5.5%

£1,648

£358,137

Southend

5.5%

£1,225

£268,662

York

5.3%

£1,150

£262,055

London

5.1%

£2,119

£494,542

Oxford

5%

£1,778

£424,755

Cambridge

4.7%

£1,600

£408,709

Top regions for rental yields in the UK

Rents in the North East are cheaper than anywhere else in the country (£748) - and so are buy-to-let properties, at £114,098 on average. This gives the region the highest average yield in the UK of 7.9%.

It’s followed by Scotland (7.6%), the North West (6.8%), Wales (6.5%) and Yorkshire and the Humber (6.5%). Gross yields in these regions have risen over the last 3 months as rents have risen faster than house prices.

London offers the lowest gross yields in the UK of 5.1% on average, only 0.1 percentage point higher than 3 months ago. With higher mortgage rates, new regulations and low house price growth in recent years, rents appear to have reached an affordability ceiling and tenant demand is starting to moderate.

The East of England and South East also offer lower gross yields of 5.6%. However, their rental yield has improved on last year as they are the two regions where house prices have fallen the most.

Region

Average gross rental yield

Average monthly rent

Average price of a buy-to-let property

North East

7.9%

£748

£114,098

Scotland

7.6%

£861

£136,070

North West

6.8%

£932

£163,559

Wales

6.5%

£918

£168,859

Yorkshire and the Humber

6.5%

£845

£156,660

West Midlands

6.2%

£970

£188,870

East Midlands

6%

£910

£180,817

Northern Ireland

5.8%

£803

£167,126

East of England

5.6%

£1,244

£267,817

South West

5.6%

£1,131

£243,806

South East

5.5%

£1,388

£300,330

London

5.1%

£2,119

£494,5420

The highest yielding areas in each part of the UK

Looking for a buy-to-let property near where you live can be useful. You know the area, understand local influences on the market and can work closely with a nearby letting agent.

So it helps to know which parts of your region offer the greatest rental yield. Here are the top 3 local authorities for average yields in each UK region.

North East: 7.9% average gross yield

Scotland: 7.6% average gross yield

North West: 6.8% average gross yield

Wales: 6.5% average gross yield

Yorkshire and the Humber: 6.5% average gross yield

West Midlands: 6.2% average gross yield

East Midlands: 6% average gross yield

South West: 5.6% average gross yield

South East: 5.6% average gross yield

East of England: 5.6% average gross yield

London: 5.1% average gross yield

What’s the outlook for buy-to-let property investment in the UK?

Supply and demand are coming back into balance, but the unaffordability of home ownership is trapping people in private renting, which is keeping rental demand above pre-pandemic levels.

It’s positive that the number of homes for rent is steadily recovering. However, we don’t expect a surge of new investment activity by landlords to accelerate the supply of homes for rent.

Rental inflation remains on track to be 3% over 2025. Encouraging new investment and growing the supply of homes for rent is the only long-term solution to easing the pressure on renters across Britain.

The outlook for buy-to-let investment remains closely tied to house prices, which are projected to experience modest growth in 2025. With rents generally rising at a slower pace than house prices, gross rental yields are expected to stabilise or see a slight increase, depending on regional dynamics and investor strategies.

What is rental yield?

Rental yield is the amount of money you make from a rental property each year against the cost of purchasing and running it. It’s always expressed as a percentage.

The gross yield only takes the cost of the property and the rental income into account.

The net rental yield, on the other hand, considers the extra costs of running the property, like maintenance and property management.

To figure out the best investment property for you, it’s worth looking at both of these yields as well as other factors.

Why is rental yield important?

Before you jump into buying a property to rent out, you've got to figure out if it’s a worthwhile venture.

If your rental income doesn't cover your costs, or you're just breaking even, unexpected expenses like fixing a broken boiler or a leaky roof can impact your finances.

So looking at the potential rental yield will help you do the maths and make sure it’s a good investment.

What else to think about with a buy-to-let property

There’s more to choosing a good buy-to-let property than just the rental yield.

You could buy a property with a strong yield, but if house prices aren’t rising or you can’t find tenants, it might not be the best investment.

House price trends

Get a feel for house price growth to see if the property is likely to rise in value. Look at historic sale prices for individual properties as well as value increases for the postcode and local area.

The cost of a buy-to-let mortgage

At the same time, you need to think about the costs of taking out a buy-to-let mortgage and all the other associated costs of running a rental property.

Tenant demand

It also helps to understand what tenant demand is like in the area and what sort of properties they’re looking for.

Speak to a letting agent to find out what’s happening in the local rental market. They’ll be able to share what tenants are looking for and which properties could be a strong buy-to-let investment.

How to work out your gross rental yield

Let’s say you want to buy a property worth £200,000. You plan to charge £1,000 per month in rent, which works out to £12,000 per year. Divide 12,000 by 200,000, then multiply by 100. That equals a gross yield of 6%.

(Annual rent / property value) x 100 = gross rental yield

How to work out your net rental yield

To work out your net rental yield, you need to take your extra costs off your annual rental income.

So add up the amount of money you think you’ll spend over the year. This will include paying the mortgage, agency fees, property maintenance, and any costs you might incur to keep up with regulations.

Then deduct these costs from your annual rental income, and do the same sum from there.

[(Annual rent - annual costs) / property value] x 100 = net rental yield

Let’s say you’re buying the same £200,000 property and charging the same £12,000 per year in rent.

But you’re spending £300 on maintenance and agency fees, which comes to £3,600 over the year.

That means your net rental yield for this property is 4.2%.

Key takeaways

  • If you’re looking for a buy-to-let property, rental yield can help you decide if the cost of the property is worth the potential rental income
  • Gross rental yields have increased in the last year as rents have risen at a faster rate than house prices
  • The highest yielding cities in the UK are Sunderland, Aberdeen and Burnley, which offer average gross yields of 8%+
  • The North East is the best region for investors looking for strong yields, offering an average of 7.9%
  • We reveal the three highest yielding areas in every region of the UK
  • Take other factors into account before you invest, like tenant demand and the potential for future house price growth

 

by Blackstones

Scrap Stamp Duty? Our Take on the Rumoured Property Tax Shake-Up

Rumours are circulating that stamp duty could soon be scrapped — replaced by a completely new property tax system. But how likely is this change, and what would it mean for buyers and sellers?

Here’s our breakdown of the speculation, what it could mean for the housing market, and our view on whether this would be good news for homeowners.

What Property Tax Changes Are Being Discussed?

At the moment, nothing is confirmed, but the proposals being talked about include:

  • Replacing Stamp Duty Land Tax (SDLT) with an annual property tax on homes sold for more than £500,000

  • Charging capital gains tax (CGT) on the sale of homes worth more than £1.5 million

  • Revaluing council tax bands, which are still based on 1991 property values

These ideas often appear in the run-up to the Autumn Budget, with ministers looking for ways to boost market activity, encourage moving, and raise revenue.

How Property Tax Works Today

Currently, there are three main ways the government collects tax on property:

  • Stamp duty – paid when you buy a property.

  • Council tax – paid annually to your local authority, based on 1991 property valuations.

  • Capital gains tax – paid on property profits, but only on second homes and investments (not your main residence).

Stamp duty is often described as a major barrier to moving, especially in areas with high house prices like London and the South East.

Who Pays Stamp Duty Right Now?

We’ve analysed who is paying stamp duty today, compared with earlier this year when tax reliefs were still in place.

  • 83% of homeowners now pay stamp duty when they move (up from 49% before April 2025).

  • 41% of first-time buyers now pay stamp duty (up from 20% before April).

  • The burden is heaviest in London, where 97% of homeowners and 79% of first-time buyers pay stamp duty.

London and the South East together account for 60% of all stamp duty payments across England.

The Case for Scrapping Stamp Duty

✅ Removes barriers to moving – encouraging transactions and improving labour mobility.
✅ Boosts housing market activity – particularly in the mid-market price range up to £500k (two-thirds of UK sales).
✅ Supports housebuilding – helping the government reach its target of 1.5 million new homes by 2029.
✅ Improves affordability for first-time buyers – particularly in London and the South East.

The Potential Downsides

⚠ £10+ billion revenue gap – stamp duty currently raises more than £10bn a year.
⚠ Bigger burden for London & South East homeowners – 1 in 3 would pay an annual property tax.
⚠ Market distortions – expect a “cliff edge” around the £500k price point, with demand bunching just below the threshold.
⚠ Short-term disruption – buyers and sellers could pause decisions while they wait for clarity.

Capital Gains Tax on Main Residences

Introducing CGT on homes worth more than £1.5m would be a major change.

Only 4% of homes are currently worth more than £1.5m, but this would disproportionately hit London homeowners — and could raise fears that the threshold might be lowered in future.

Main residence CGT relief is currently worth £36bn a year, so even a partial removal would be a major policy shift with big political implications.

Changes to Council Tax

A revaluation of council tax bands could “tidy up” the system, but unless new higher bands are introduced, it is unlikely to raise enough revenue to replace stamp duty.

Any changes here would again have the greatest impact in higher-value areas.

Our View

Scrapping stamp duty would be welcomed by many buyers and sellers and could inject life into the housing market — especially for properties priced under £500k.

However, an annual property tax could become a long-term burden, particularly in London and the South East where prices are higher, and risks dampening demand where the market has already been flat for a decade.

The biggest question remains: how will the government replace the £10+ billion currently raised by stamp duty each year? Until we have answers, the market is likely to remain cautious — and we could see a short-term slowdown as people wait for clarity.


Key takeaways

  • There has been a lot of speculation about possible changes to property taxes in the Autumn Budget, which is common ahead of any Budget
  • The speculation is linked to recent reports published by various think tanks
  • One idea is to replace stamp duty with a new annual property tax on homes sold for more than £500k
  • Another is to tax sellers on the capital gains they make from selling their main residence if it's worth more than £1.5m
  • Reforms to encourage market activity and remove barriers to homeownership are welcome
  • But speculation can be unhelpful for those in the middle of buying a home or making an offer
  • And remember, most speculation stays as just that - and doesn’t turn into the reality
  • We dive into who currently foots the UK’s stamp duty bill and who would benefit from changes to the property tax system

 

by Blackstones