The areas of the UK with the best ROI for rental yields

It’s the million-dollar question asked by everyone looking to make the most from their property investment. It’s also the trickiest to answer, given the regular and continuous shifts from one local market to the next.

What’s interesting is how here in the UK, the best ROI on a property investment can often be found away from the usual obvious hotspots. You’d be forgiven for setting your sights exclusively on London, but for the strongest possible returns, you’d be wise to look a little further north.

Home to more than 60,000 students, a surprisingly cosmopolitan lifestyle and the sprawling greenery of Sherwood Forest, Nottingham has topped the table as the new front-runner. If you’re considering investment property finance for a purchase or redevelopment project, Nottingham is currently the most lucrative spot for a buy-to-let property.

In fact, the latest comparison carried out by Totally Money concluded that major university cities are the places to be for buy-to-let investors. Leeds, Manchester and Liverpool have all appear prominently in the rankings.

So if you’re planning on putting buy-to-let property finance to the best possible use, it’s time to look north!

Nottingham, Liverpool and Newcastle’s Strong Performance

Towering over its counterparts from across the UK, Nottingham’s NG1 postcode has dominated the listings with a whopping 12% buy-to-let yield. Positioned perfectly to accommodate Nottingham Trent University’s thousands of students, healthy returns are all but guaranteed.

Average property prices in NG1 currently stand at around £150,000, though monthly rents remain surprisingly high at an average of £1,525. Do the maths and you could be looking at a yield of a staggering 11.99%. In neighbouring NG7, things are almost as impressive with potential yields in the region of 8.9%.

On the whole, average property prices in Nottingham currently sit at £267,900, while the average monthly rental income is £750.

Liverpool continues its strong performance for another year, taking two spots within the 10 most lucrative places. Positioned close to two of the city’s universities, properties in Edge Hill, Fairfield and Kensington are generating rental yields as high as 9.8%.

Meanwhile, Newcastle has seen significant growth with its NE1 postcode climbing to seventh position - again, boasting close proximity to Northumbria University and Newcastle University.

Buy-to-let in London

For those looking to put their property development finance to use in London, the capital is still a challenging region to generate a decent yield. The reason being that while monthly rents continue to climb, property prices in key areas remain no less than astronomical.

Thamesmead and East Ham promise the healthiest yields in London, though struggled to break into the top 300 locations in Totally Money’s latest rankings.

Buy-to-Let Mortgages

It’s worth remembering that the terms and the availability of the buy-to-let mortgage you secure will have a direct impact on the profitability or otherwise of your investment. Before going ahead, we therefore strongly advise carrying out a whole-of-market mortgage comparison, with the assistance of an independent specialist.

The more competitive the loan you secure, the stronger the ROI you’ll enjoy as a result.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.