Highest Yields in the UK: Best Areas for Investment
You’ve been considering it for a while, but it’s finally time to take the leap and become a property investor. However, you should think about investing in an area that will generate the highest rental yield.
As buy-to-let investors, you should understand how to generate good rental yields from your investments by considering property types, tenant demand and potential property price growth.
You can calculate if a property is a good investment by gross rental yield, where the annual rental income is a percentage of the property price. The net rental yield will also factor in additional costs, such as maintaining, renovating and renting the property.
However, picking the right location is the most important thing to consider when investing in rental property in 2024 to generate the highest yield.
Key Take Aways
- Rental yield is the main factor that will help you decide if the property is worth purchasing, as it will help you work out the potential rental income.
- The highest-yielding cities within the UK are Sunderland, Dundee and Glasgow, with an investment property in one of those areas offering between 7.7% and 8.4%
- The North East, where Yield Investing focuses on purchasing properties, is the best area for investors looking to generate a high yield, with an average of 7.15%.
Best UK Regions for High Rental Yields
At the end of 2023, tenant demand in the UK was a third higher than in previous years. The supply of housing was also limited due to low investment levels. It is predicted that in 2024, rents will rise between 5 – 8%, whilst property prices within some regions of the UK will stay relatively low, meaning gross yields will continue to increase.
The top places for generating a high rental yield for property investment are in the North East. Buy-to-let properties in the Northeast have the lowest average property price, with a rental property in the Northeast area costing, on average, £109,715. The rental prices a property can generate depending on size is, on average, £671. This gives an average yield for North East property investments of 7.34%.
Scotland closely follows with an average rental yield of 7.32%, and the third highest yield is in the northwest of the UK, which generates an average yield of 6.52%.
The lowest rental yields are offered within London, where the average yield is 4.92%. This is due to the higher mortgage interest rates and property values. Rents within London have hit an affordability maximum, and demand is levelling out, affecting the yields that can be generated.
Top Cities for Rental Yields in the UK
As reported by Zoopla, major cities like these within the North East and Scotland provide attractive property investment opportunities because of their low house prices, student populations and large employment areas.
| City | Average gross rental yield | Average monthly rent |
| Sunderland | 8.50% | £598 |
| Dundee | 8.07% | £783 |
| Burnley | 7.96% | £561 |
| Glasgow | 7.90% | £930 |
| Middlesbrough | 7.85% | £604 |
| Aberdeen | 7.45% | £673 |
| Liverpool | 7.43% | £798 |
| Blackburn | 7.41% | £656 |
| Hull | 7.30% | £594 |
| Grimsby | 7.07% | £602 |
Why is the North East the best area to invest in property?
Rental Demand
One of the huge benefits of the North East property market is the thriving rental demand. There are 5 universities, a prominent business sector, which includes the oil & gas industry, and a significant cultural environment. All these elements attract students, young professionals and families who require a rental home. There’s a steady stream of potential tenants, which means a steady stream of rental income.
Affordable Property Prices
The property price entry point is relatively low compared to other areas in the UK. The average property price in the North East is approximately £109,715, compared to the UK average of £232,600. This allows investors to enter the market with a manageable initial investment, ideal for first-time investors and those looking to expand their investment portfolio.
Development and Regeneration
Areas within the North East are going through more considerable regeneration and development programmes. The larger cities of Newcastle, Sunderland, Durham, and the Middlesbrough area have witnessed impressive revamps to their city centres and surrounding areas, like the Quayside area of Newcastle. Commercial hubs are being added, and residential areas are being further developed. These plans are helping with not only the appeal of the region but also the capital appreciation.
Capital Appreciation
The potential for capital appreciation in the North East is high. The property market in this region has seen steady growth over the recent years, and experts predict that this will continue. By purchasing a property now, you could benefit from the rising property prices and increase your return on investment.
Investment Opportunities
The investment options in the North East are diverse, with opportunities to suit most investors. Whether you would like to explore buy-to-let property investment or are interested in investing in the social housing sector or student accommodation, there is an opportunity for all investors. The North East is also known for offering many commercial investment opportunities.
Supportive Business Environment
Regions with a strong business network and the North East delivers in this area. The area is growing and expanding in business areas such as technology, healthcare, oil and gas, and renewable energy. This helps stabilise the region’s economy, positively affecting the property market and you as an investor.
Cultural Scene and Lifestyle
The cultural and lifestyle aspect of the North East is another one of its advantages for investment. The history, landscape, friendly communities, and social scene make it desirable for people to want to live there, offering high demand for property.
If you’re looking to invest in property in the UK but struggling to navigate the market, or you can’t decide the best option, we are here to help. We offer stress-free property investment from £70,000 and have a range of properties from 1-bedroom apartments to entire units. By purchasing a property with us, you are confident that you can generate up to a 9% yield on your investment. Our investment properties are always tenanted, as we work with a local housing provider and take care of all the maintenance and refurbishment where necessary.
Investment Property in the UK with Yield Investing
The North East presents a very compelling story for property investment. The rental market is robust, and property prices are predicted to rise in the next few years. Affordable home prices make it one of the best areas to step into property investment, as there is also a high chance of capital appreciation, regardless of your budget.
The demand for social housing in the UK is on the rise, and more and more people are living in poor conditions, in temporary housing, or taking on privately rented properties that they simply can’t afford. At Yield Investing, this is where we focus our investment strategies.
Investing in social housing means investing in the long term, and if you’re seeking a high-yield investment, it’s perfect for you. This is a sector of housing that may be unique to investors but one that should be in everyone’s portfolio. Not only will you see a high yield on your investment, but you will also be helping to home some people who need it within the UK.If you’re curious about exploring social housing investments in the Northeast and how to invest purposefully to benefit society and your investment portfolio, contact our property advisors today to learn more about working with us.
