As an overseas investor, it can be difficult to know the best places to invest in property in the UK. This in-depth guide breaks down the best locations for property investment in the UK, including top cities and regions.
Property is a great way for you to diversify your investment portfolio and ensure a steady return on investment (ROI). Investing in property provides a sense of security compared to more volatile investments, like stocks, and they can provide a passive income through rental opportunities. For overseas investors, the UK property market is considered one of the most stable property markets to invest in, but this can be challenging to navigate if you’re unfamiliar with the UK. That’s why we’ve compiled this comprehensive guide so you can identify the best place for property investment in the UK.
We’ll look at everything from places with the most significant potential for growth to factors like public transport and the job market. We’ll also consider how foreign investors can benefit from investing in property in the UK. Plus, we’ll tell you about some of Yield Investment’s exclusive social housing/supported living investment opportunities that could help you get a superior return on your investments.
By the end of this guide, you should feel confident about where to invest your money and comfortable about managing your property portfolio going forward. So let’s get started!
7 Best Places to Buy Property in the UK in 2023
Here are the top seven places in the UK and the key metrics to consider when choosing where to invest.
| City | Average Property Price | Annual Rental Growth | Average Monthly Rent | Rental Yield |
| London | £532,000 | 16.1% | £1,976 | 6.57% |
| Edinburgh | £378,230 | 12.7% | £1,130 | 9.89% |
| Manchester | £256,847 | 14.8% | £977 | 6.21% |
| Leeds | £256,511 | 9.0% | £917 | 6.12% |
| Birmingham | £250,000 | 11.6% | £849 | 6.81% |
| Sheffield | £241,354 | 11.3% | £747 | 5.57% |
| Liverpool | £198,505 | 8.9% | £758 | 4.29% |
London
Average Property Price: £532,000
Annual Rental Growth: 16.1%
Average Monthly Rent: £1,976
Rental Yield: 6.57%
As the capital and largest city in the UK, London is a highly sought-after location for property investors worldwide. The city’s economy is known for its diversity, boasting multinational corporations, thriving startups and a robust financial sector. London’s strong economy, world-class infrastructure, and cultural richness have made it a desirable location for investment in real estate.
The average property price in London is significantly higher than the UK average, reflecting the city’s desirability as a property investment location. According to Zoopla’s annual percent rental change report, London saw an increase of 16.1% in rental prices in 2022, outpacing the UK average of 11.1%. The city’s property prices have steadily grown, with the JLL London Residential Forecast projecting a 4.5% price increase in 2026.
London is considered the best place for property investment in the UK due to its high-demand rental market. This is driven by various factors, such as the city’s strong job market, global reputation and diverse population. With over 9 million people living in London, it has a diverse mix of tenants, including young professionals, students and families. This mix ensures a steady demand for rental properties and a low-risk investment with guaranteed returns.
Edinburgh
Average Property Price: £378,230
Annual Rental Growth: 12.7%
Average Monthly Rent: £1,130
Rental Yield: 9.89%
Edinburgh is Scotland’s capital city and is considered one of Europe’s best cities to invest in property. With its rich cultural heritage, stunning architecture, and modern infrastructure, it’s not surprising that Edinburgh has become a prime destination for property investors looking for excellent returns and minimal risk. Its astonishingly high rental yield of 9.89% is also worth noting, making it one of the highest-yielding areas in the UK in 2023.
The city’s economy is fueled by a vibrant finance and technology industry, contributing to its consistent property market growth. According to Zoopla, Edinburgh has an average property price of £378,230, with an annual percentage rental change of 12.7%. JLL’s price growth index reveals that Edinburgh has an average of 4.8% price growth between 2022 and 2026, demonstrating the steady growth potential of the city’s property market.
Apart from the strong economy and steady growth potential, Edinburgh also offers numerous opportunities for rental yields and capital growth. The city has a high demand for rental properties due to its growing population and limited housing availability. As a result, investors can expect a stable rental income and benefit from capital growth in the long term.
Edinburgh’s thriving tourism industry is another factor that makes it the best place for property investment in the UK. The city is a popular tourist destination, with millions of visitors yearly, creating a lucrative market for short-term rental properties.
Manchester
Average Property Price: £256,847
Annual Rental Growth: 14.8%
Average Monthly Rent: £977
Rental Yield: 6.21%
Manchester is one of the best places to invest in property in the UK due to its thriving economy and population growth. The city has seen a significant increase in house prices in recent years, making it an attractive option for investors. According to Zoopla’s annual percent rental change report, the rental market in Manchester grew by 14.8% in 2022, indicating a strong demand for rental properties in the city.
In addition to its strong economic growth, Manchester has been recognised as one of Europe’s best places to live. In 2022, Manchester was ranked 28th in the world’s most liveable cities. This ranking was based on economic strength, sustainability and quality of life.
Manchester’s property market is expected to continue growing, as the city’s population is projected to increase to 630,000 in the next six years. This, coupled with the government’s ongoing investment in infrastructure and regeneration projects, makes Manchester a top location for property investors.
According to Zoopla’s average property price index, the average property price in Manchester is currently £256,847, making it about 2x more affordable than London, where the average property price is £532,000. Furthermore, JLL’s price growth forecast predicts that Manchester’s property prices will increase by 5.0% per annum by 2026, indicating a potential for solid capital growth for investors.
Leeds
Average Property Price: £256,511
Annual Rental Growth: 9.0%
Average Monthly Rent: £917
Rental Yield: 6.12%
Leeds, located in the heart of West Yorkshire, has become one of the most famous cities in the UK for overseas investors looking for investment property. With close to 600,000 people, it’s the fourth-largest city in the country and a significant economic powerhouse. Leeds has a strong and diverse economy with a GDP of £64.6 billion, a key determinant for which is the best place to invest in property.
The city has a vibrant culture and offers something for everyone, with an array of shopping centres, restaurants, museums, and galleries. Leeds is also home to several universities, including the University of Leeds, which is ranked among the top 100 universities in the world.
One of the most significant advantages of buying property in Leeds is its relatively affordable house prices. As stated by Zoopla, the average property price in Leeds is £256,511, significantly lower than other major UK cities such as London, where the average price is £532,000.
Leeds has also undergone significant regeneration in recent years, making it an attractive location for property investors. The city’s South Bank Leeds regeneration project is one of the biggest regeneration schemes in Europe and will see £500 million invested in new homes, commercial spaces and infrastructure. This will create over 35,000 new jobs and provide 8,000 new homes, making it an exciting time to invest in the city.
According to Zoopla, the rental market in Leeds also thrives, with an annual percent rental change of 9.0%. This is higher than other major UK cities such as Liverpool and Belfast. With a robust rental market, investors can expect a reliable and consistent income stream from their properties.
Birmingham
Average Property Price: £250,000
Annual Rental Growth: 11.6%
Average Monthly Rent: £849
Rental Yield: 6.81%
Birmingham, located in the heart of England, has become a popular destination in recent years. The city is the third-largest in the UK, with a population of about 2.6 million, and has seen a significant increase in property prices over the past few years. As stated by Zoopla, the average property price in Birmingham is £250,000, an increase of 11.6% over the last year, which is a testament to the growing demand for properties in the area.
One of the reasons for the growth in demand for properties in Birmingham is the influx of people moving into the area. Birmingham is a business hub with a thriving economy and numerous job opportunities in various sectors. This has increased the number of people moving into the city, particularly young professionals, students, and families.
Birmingham has also seen increased rental demand, offering landlords a good return on investment. The Zoopla’s annual percent rental change for Birmingham is 11.6%, with the average rent for a two-bedroom property being £849 monthly. This is good news for property investors, as it indicates a steady rental income and the potential for capital growth in the future.
Middlesbrough
Average Property Price: £115,554
Annual Rental Growth: 10.4%
Average Monthly Rent: £606
Rental Yield: 7.7%
Located in the Northeast of England, Middlesbrough provides great investment potential for investors. With its high affordability, significant rental demand and rich community/culture, it’s becoming increasingly popular amongst property investing looking to achieve high yields with the promise of future capital growth.
When it comes to yields, Middlesbrough emerges on top of the pile in England. The large North Yorkshire town currently provides investors with a gross annual yield of 7.7%, thanks to the optimum combination of low property prices and steady median monthly rent of £606
Zoopla’s average property price index states the average property price in Middlesbrough is £155,554, with a property price growth of 10.4% in the last year. According to the recent “European Cities and Regions of the Future” report published in the Financial Times, Middlesbrough has been ranked 3rd among the top investment hotspots.
Durham
Average Property Price: £226,653.
Annual Rental Growth: 4.5%
Average Monthly Rent: £635
Rental Yield: 7.4%
Durham is a historic city in northeast England known for its picturesque landscapes, rich history, and world-renowned university. According to Zoopla, the average property price in Durham is £226,653, with the city boasting rental yields of 7.4% making it one of the most lucrative areas for property investors in the UK.
Durham is home to Durham University, which significantly impacts the local property market. The demand for rental properties from students can provide opportunities for buy-to-let investors, especially in areas close to the university campuses.
Durham’s thriving tourism industry also contributes to its attractiveness for property investors. Tourism contributed more than £1 billion to Durham’s economy for the first time ever in 2022, attracting around 19 million visitors per year.
The North East has a great mix of low property prices, amazing rental yields and a very high chance of rising house prices in the future due to all the new developments in and around the area.
The Key to Making the Best Property Investment in the UK
Yield Investing’s social housing/supported living properties are located in the best areas in the UK for housing contract offers that can generate the best rental yields for our clients. These areas offer typical investment opportunities such as individual flats, freehold blocks, large HMOs/bedsits, and family rentals. These are popular property investment strategies with overseas clients due to the potential for high yields and growth.
With complete management systems and effective pricing for cash purchases, you can be confident that these properties will be a solid addition to your portfolio. You can contact us here to get started.
Where is the Best Property ROI in the UK?
The top three UK cities with the best ROI (using rental yield as a measure) include Edinburgh (9.89%), Birmingham (6.81%), and London (6.57%). However, reports from Zoopla indicate UK properties in the Scotland region boast the highest rental yield in 2023, with cities like East Ayrshire (8.48%), West Dunbartonshire (8.40%), and North Lanarkshire (8.07%) topping the list. Other top UK regions with the best ROI are the North East and North West, whose top three cities to invest in have rental yield values ranging from 6.98% to 7.92%.
What Type of Property is Most in Demand in the UK?
Terraced homes are the most in-demand property in the UK, popular among 41% of property investors. This is followed by semi-detached homes at a close 40%, while detached homes and flats/apartments account for 32% and 28% of demand, respectively. Surprisingly, while other home types fell in demand in the past year, flats saw a 1% increase in demand.
Is Buying Property in the UK a Good Investment?
Buying property in the UK can be a good investment as the property market is thriving, with several locations experiencing a price spike, leading to high rental levels. Landlords can still see healthy investment returns, with an average rental yield of 4.75%, depending on the property’s location. However, naturally, there are risks, and it’s essential to do thorough research and seek professional advice before making a decision. Remember that when selling, you may have to pay capital gains tax which will reduce profits.
Up-and-Coming Places to Invest in UK Property in 2023 – 2024
When it comes to opportunities for property investors, the up-and-coming areas are often overlooked. Sure, the best areas for property investment will always feature cities like London, but many other areas have fantastic potential. If you’re keen on the idea of looking at up-and-coming areas to invest in property, you should add these to your list!
Hartlepool
Average Property Price: £131,520.
Annual Rental Growth:
Average Monthly Rent: £484
Hartlepool is a town located on the northeast coast of England, known for its maritime history and seaside attractions. Compared to many other areas in the UK, Hartlepool boasts relatively affordable property prices, with an average price of £131,520. This makes it an attractive option for first-time buyers and investors seeking more budget-friendly opportunities.
Hartlepool has been undergoing regeneration initiatives aimed at improving infrastructure, leisure facilities, and public spaces. These factors are encouraging for investors seeking high rental yields and long-term capital gain for the future.
Bradford
Average Property Price: £158,642
Annual Rental Growth: 3.8%
Average Monthly Rent: £581
Investing in property in Bradford, UK, presents a promising opportunity for rental income and capital growth. With affordable house prices compared to other cities in the UK, such as London and Manchester, it’s an attractive option for first-time buyers and investors.
According to Zoopla, the average property price in Bradford is around £158,642, significantly lower than the national average of £288,000. The city also saw annual rental growth of 3.8% between September 2021 and September 2022, indicating a high-yielding investment opportunity in the future.
Up-and-coming areas like Bradford and Hartlepool shouldn’t be overlooked for property investment in the UK. When considering where to invest in the UK, they offer fantastic opportunities at lower entry points than more established cities like London, making them prime spots for low-risk investments with secure returns.
What to Consider When Choosing the Best Place for Property Investment in the UK
When choosing where to invest in property in the UK, these are the main things you need to consider to ensure that your investment is well worth it.
Economic Stability
You’ll want to look at the economic stability of an area before investing. Any area with a steady stream of people entering and leaving is usually considered suitable for investment properties. Places with high population growth also indicate a healthy economy and job market, which are key factors when looking for the best areas to invest in your next property.
Local Market Conditions
As you have seen from our list of the best areas to invest in the UK, it’s also important to consider the local housing market in detail, including supply vs demand, average selling prices and rental yields. If you’re looking for guaranteed returns on your property investments, then it’s essential to research and ensure no hidden costs when buying a property in an area.
Political Stability
Finally, it’s worth looking into the political stability of an area, especially if you plan to invest long-term.
Examining political stability can help you determine if you’re likely to face any disputes or policy changes and whether any potential changes could negatively affect your investments should they arise further down the line. Looking into local crime rates and access to public services can also give you a good overview of how good the area is for investments.
Investing in UK Property in 2023
While the best place for real estate investment in the UK can vary depending on your goals and risk profile, there are still plenty of excellent opportunities to generate solid returns in the UK real estate market. Thanks to the expansive economic growth and an abundance of desirable assets, the UK has become an attractive market for overseas investors looking for a steady and reliable return on investment.
With Yield Investing, you have access to an expert team with the knowledge to help you identify the best places to buy a social housing/supported living property. You can also be sure that your investments will provide safe and secure returns. Contact us now to get started.
