The UK property market is a strong contender for investment opportunities. Despite economic changes, the sector continues to attract local and overseas investors.
When looking to invest in property, it’s important to do your research, as not all property investments are equal, and look for the higher yield opportunities that are available.
What is a high-yielding property?
A yield measures the income a property can generate for an investor. It is expressed as the percentage of the property value.
There are two types of yield:
- Gross Yield – The gross rental yield is the annual rental income divided by the property’s purchase price.
- Net Yield – The net rental yield includes maintenance and management costs, providing a clear picture of the profit.
To calculate a rental yield, you can use our rental yield calculator.
A high-yield property investment offers a higher return than a standard property investment. Research by Zoopla found that in 2024, the average gross rental yield in the UK was around 5.6%. Natwest confirmed that anything around 5-6% is considered a good investment, with anything 6% and above considered a very good investment.
There are three ways to determine if a property is going to be high yield before committing to the investment:
- Gross rental yield is the main factor to consider when evaluating a property. Rental yield indicates how high-yielding the property is, so the higher the yield, the better the return on the investment.
- The demand for rental properties in the areas you are looking at. Higher-yielding properties are often located in regions with high rental demand, but the supply may be low.
- The cost of the property and rent can be achieved each month. High-yield properties are usually purchased at a low price but can create a competitive rent.
At Yield Investing, we offer an average 9% yield return on your investment, which is considered one of the highest rental yields in the country.
Benefits of Investing in High-Yielding Properties
When investing, choosing low-yielding assets can lead to underwhelming returns and the burden of covering ongoing expenses. Carefully selected high-yielding investments can offer a more attractive proposition as they not only promise better returns but also provide a sense of security and confidence.
Increased Cash Flow
High-yield properties generate more substantial rental income, allowing you to comfortably cover expenses and enjoy a surplus. This increased cash flow provides a financial buffer and can contribute to your overall economic stability.
A Faster Return on Investment
With higher yields, you’ll see returns on your investment sooner. This rapid payback period can be particularly appealing for investors looking to build wealth quickly or those nearing retirement.
Improved Financial Security
While all investments carry some level of risk, high-yield properties offer a degree of protection against market fluctuations and economic downturns. The consistent income stream can help offset potential declines in property value, providing a more stable investment overall.
Potential for Capital Appreciation
Many high-yield properties also have the potential for significant capital growth over time. This dual benefit of substantial rental income and potential value increase can lead to impressive long-term returns.
Portfolio Expansion
The healthy cash flow from high-yield investments can provide capital for further investment opportunities. This allows you to expand your portfolio more rapidly, potentially accelerating your wealth-building journey.
Key Factors in Identifying High Yield Property Investments
Rental Property Type
The size of the property and other factors can affect the yield return. Residential properties such as student accommodation, Houses in Multiple Occupations and government-backed properties normally generate a higher yield.
Social housing returns make buy-to-let properties one of the best types of property to invest in the UK. These investments provide stable rental income and benefit from solid demand and government support, making them an excellent choice for maximising returns while minimising risk.
Market Trends and Economic Indicators
Staying informed about market trends is essential for successful property investment. Influences such as interest rates, employment rates, and government housing policies can significantly impact property prices and rental yields. For example, lower interest rates make borrowing money or securing a mortgage more affordable, stimulating demand in the property market.
Awareness of the specific location and its trends, like population growth and local development, can be invaluable for predicting future demand. Areas experiencing growth will likely increase the rental market, making them more attractive for investment.
Location
If you’re looking to invest in private rental properties, exploring major cities like London, Manchester, and Birmingham can be a popular option due to their strong economies, which can drive rental demand. These areas also offer good transport links, ongoing development, and proximity to universities, business districts, and local amenities.
Research property prices, occupancy rates, and expected rental yields in these areas to determine whether an investment will generate a good return. Currently, the highest yields in the UK can be found in the North East of England, with rental yields averaging between 7% and 8.5%.
If you prefer a hands-off approach, the specific area may be less important. At Yield investing, we find opportunities in regions of the UK that offer the highest yields. We focus our efforts on the Northeast and West of the UK, where initial costs are lower, but rental demand is increasing. We also collaborate closely with local authorities to provide government-funded social housing for those in need where they need it most.
What are the risks of high yield property investments?
A high-yield property investment can offer substantial rewards; however, like every investment, it can also come with risks. There are certain things that you can do as an investor to try and mitigate these issues.
| Risks | What you can do | What you Gain |
| Market Volatility | Diversify | If you have or are looking at multiple investments, spread them across different property types in various locations so you’re not exposed to one single market. |
| Time-Consuming Property Management | Professional Management | Use professional and experienced property management services to manage any tenant issues, maintenance and rent collection. |
| Overlooking the Importance of Research | Due Diligence | Research purchasing or investing in a property to make sure it meets your investment needs. |
| Complexity and Stress of Handling Multiple Aspects of Property Management | Invest in a Full-Service Provider | Look at investing with a provider that covers all aspects, from sourcing and renovating the property to making maintenance and rental payments. This can take the stress away from property investment and generate your full rental yield potential. |
Strategies for Finding High-Yielding Investment Property
| What to research | Why | What Yield Investing Can Offer |
| Average Rental Yield | Carry out research on the typical rental yield within the area and get an idea of the potential rental income that could be generated each month. | We offer a guaranteed rental yield of 9% on most of our investment properties, which is paid directly into your back from the first day the investments are complete. |
| Tenant Demand | A higher rental income can be earned if demand is high in the area, but supply is limited. This can also mean there are fewer gaps where the property could be untenanted. | Tenant turnover is not a concern, as we supply the tenants and guarantee no rental caps in your investment. |
| Location | Local amenities, public transport and nearby amenities such as hospitals, schools, shops and universities are usually in higher demand. | We research the areas and focus our efforts on the North East and West, where demand for supported and social housing is high. |
| Future Development Plans | See if you can find any future development plans or regeneration plans. These enhance an area’s desirability, which then enhances property prices. | |
| Potential for Capital Growth | Research historical property prices. This can help predict a property’s future capital growth. | When you look to invest with us, we map out the potential growth in your rental income over the years. |
| Potential Ongoing Expenses | When looking at potential properties, consider factors that might increase the cost once purchased, such as renovation, repair and ongoing maintenance costs. | We cover all expenses, such as renovation costs, repairs and maintenance, giving you a stress-free, hands-off approach to becoming a landlord. |
| Employment Opportunities | Properties in areas with a lot of employment opportunities usually have a more consistent rental demand. | Rental demand doesn’t need to be a concern as we provide the tenants through the housing association with whom we work closely. |
| Local Property Market Trends | Historical data can be used to examine local property market trends, such as the time it takes for properties to sell, the time they are vacant and any fluctuations in the market. |
Start Investing in Property with Yield Investing
If you’re interested in generating a high yield from your investment, then Yield Investing might have the answer. We focus on providing hassle-free investment opportunities that allow investors to earn a passive income that generates, on average, a 9% yield whilst eliminating the headaches typically associated with owning a rental property. Our project teams renovate and manage our investment properties and developments, which also have long-term tenants in place. This will offer investors a stable and reliable source of rental income for our clients.
We also focus on increasing the yields made from the investments by offering alternative ways to invest, which you don’t usually find on the property investment market. We combine this with our local market knowledge to give clients property investment opportunities that benefit their portfolios.
Are you curious about how your investments can make a difference? Contact our property advisors today and build a portfolio that delivers returns and transforms lives and communities. Together, we can shape the future of responsible investing and housing solutions in the UK.
