Highest Yielding Areas for Buy-to-Let Property in the UK in 2024
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Which Areas Offer High Yields in the 2024 UK Buy-to-Let Market?
If you are a buy-to-let landlord and honing your strategies for real estate investing, you’ll want to keep your ear to the ground regarding high-yielding areas.
As you would expect, different areas offer varying rental yields depending on the average property price and typical rents.
Today, we’ll look at some of the highest-yielding areas in the UK in 2024, helping you identify what to invest in right now and find good-value properties with high potential returns.
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Gross Rental Yield vs Net Rental Yield
Buy-to-let investors need to understand the difference between gross and net rental yields.
Gross rental yield refers to the rental income as a percentage of the property’s value. However, net rental yield also deducts the cost of property maintenance and other factors when determining that percentage. It is a good idea to understand both gross and net rental yields.
You can work out your gross rental yield by dividing your yearly rental income by the property price and multiplying it by 100.
According to Zoopla’s guide on high-yielding areas, the average UK rental yield is 5.49%, while the average buy-to-let investment costs £262,288, and the average rent stands at £1,201.
Find Out More: Discover new property insights in our guide on the best places to buy to let in the UK, and learn more about what you need to know about rental property for sale before you buy.
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Best Buy-to-Let Areas for Rental Yields: Top 10 Cities for High Yields
2023 was a subdued year in the property market. The cost-of-living crisis forced many landlords out of the South East region, looking for better-value properties elsewhere with higher potential yields. However, this may have been a good thing for those savvy investors.
Current data shows that the ten highest-yielding cities in the UK were all in the northern regions, where properties are considerably cheaper than down south. Unsurprisingly, Liverpool and Glasgow enter the top 10 list with rental yields of 7.43% and 7.90%, respectively.
These areas offer fantastic-value properties due to low house prices and huge student populations. Both cities have thriving economies with plenty of employment prospects, making certain areas within Liverpool and Glasgow exceedingly popular with tenants.
Burnley investment properties proved to be the area with the highest rental yields in the North West, exceeding 7.96%. According to the Zoopla Rental Index, the best-yielding places at the beginning of 2024 were as follows:
| City | Average Gross Rental Yield | Average Monthly Rent | Average Buy-to-Let Price |
|---|---|---|---|
| Sunderland | 8.50% | £598 | £84,432 |
| Dundee | 8.07% | £783 | £116,498 |
| Burnley | 7.96% | £561 | £84,575 |
| Glasgow | 7.90% | £930 | £141,180 |
| Middlesbrough | 7.85% | £604 | £92,292 |
| Aberdeen | 7.45% | £673 | £108,436 |
| Liverpool | 7.43% | £798 | £128,905 |
| Blackburn | 7.41% | £656 | £106,209 |
| Hull | 7.30% | £594 | £97,602 |
| Grimsby | 7.07% | £602 | £102,208 |
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Rental Yields UK: What Are the Best Regions for High Yields in the UK?
As you may have predicted, based on the top-performing cities, the northern UK regions were also the best places for rental yields at the start of 2024.
The North East, Scotland and North West took the top three spots, while Northern Ireland and Wales were just a little behind.
Thinking of investing in property in London? London ranked lowest for gross rental yields at 4.92%. This could be down to higher mortgage rates and subdued price growth throughout 2023. Zoopla also noted how rents had reached an affordability ceiling in the capital, which had affected yields.
The East of England and South East offered similarly low yields of 5.17%. These regions had seen the most considerable reduction in house prices, which improved yields by 4.50% and 5.0% from 2022.
| Region | Average Gross Rental Yield | Average Monthly Rent | Average Buy-to-Let Price |
|---|---|---|---|
| North East | 7.34% | £671 | £109,715 |
| Scotland | 7.32% | £777 | £127,326 |
| North West | 6.52% | £828 | £152,369 |
| Northern Ireland | 6.24% | £746 | £143,462 |
| Wales | 6.23% | £848 | £163,283 |
| Yorkshire and the Humber | 6.23% | £781 | £150,504 |
| West Midlands | 5.78% | £881 | £182,947 |
| East Midlands | 5.70% | £845 | £177,816 |
| South West | 5.23% | £1,058 | £242,532 |
| East of England | 5.17% | £1,143 | £265,351 |
| South East | 5.17% | £1,291 | £299,890 |
| London | 4.92% | £2,125 | £518,056 |
Read More: Check out our guides on what is an investment property and buying a house to rent out if you’re new to the buy-to-let market.
Rental Yield UK: Buy-to-let Property Investment Outlook for 2024
According to the Zoopla report, tenant demand at the start of 2024 surpasses the 5-year average by a third, constrained by limited new investments.
Despite falling house prices and rising rents improving gross yields, indications suggest a shift in the rental market, with an expected halving of annual UK rental growth putting rates between 5% to 8% in 2024 – the lowest since 2021. This aligns with other forecasts, with Savills predicting a 6% rental growth for 2024.
With property prices due to drop further in 2024, buy-to-let investors may see rental yields grow higher over the next 12 months.
Discover More Articles: To further your buy-to-let knowledge, check out some of our buy-to-let area guides, such as our Bootle buy-to-let guide.
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