The UK property market has long been a popular investment destination, offering a wide range of opportunities for both local and international investors. But with ever-changing market dynamics, it’s crucial to know which locations yield the highest returns.
Traditionally, London property was the go-to option particularly for foreign investors; however, with house prices continuing to climb and the average house price sitting around £691,565, this can make it a less attractive option (more on this below). So, what is the alternative?
If you're considering property investment in the UK, the return on investment (ROI) will likely be a key factor in your decision-making. So, to help you on your way, we've looked at the top UK property locations that currently offer the highest rental yields and capital growth and added a few left field options just to mix things up!
1. Manchester: The Northern Powerhouse
Manchester has earned its place as one of the UK’s most lucrative property investment hotspots. As well as being famous for those two very successful football teams, it is also known for its economic growth, large student population, and ongoing regeneration projects. Manchester consistently delivers impressive rental yields and capital appreciation.
Average rental yield: 6-7%
Capital growth: 5-8% annually
Key areas: Salford Quays, Northern Quarter, Ancoats, and Deansgate
Why invest in Manchester? The city is a major hub for media, technology, and financial services, attracting young professionals. This creates a high demand for rental properties. Plus, significant infrastructure projects like HS2 (High-Speed Rail) are set to boost Manchester’s connectivity, further increasing property values.
2. Liverpool: A UK Property Location that Yields the Highest Returns with added Affordability
Liverpool is another Northern city that stands out for its impressive rental yields, affordability and its TWO successful football teams. The city’s economy is on the rise, driven by industries like tourism, maritime, and digital innovation. The combination of low property prices and strong rental demand results in a UK property location that stands our as yielding the highest return.
Average rental yield: 7-8%
Capital growth: 4-6% annually
Key areas: Baltic Triangle, L1 City Centre, Ropewalks, and Anfield
Liverpool's growing reputation as a cultural and digital hub and its easy accessibility due to strong transport links to the whole of the British Isles, continues to attract students and young professionals, who typically rent for longer periods. This steady demand ensures reliable rental returns, while property prices remain relatively affordable compared to other major cities. Significant inward investment, particularly around the Docklands area, has led to extensive regeneration, which has in turn boosted the city's attractiveness.
3. Leeds: The Thriving Student Market
Leeds has been experiencing strong growth in recent years, and it’s not just driven by students. The city is seeing major infrastructure developments and a rise in job opportunities, particularly in finance, healthcare, and education. The strong student population and an influx of young professionals ensure high rental demand.
Average rental yield: 5-6%
Capital growth: 4-6% annually
Key areas: Headingley, Hyde Park, Leeds Dock, and City Centre
Leeds benefits from being one of the fastest-growing cities in the UK and has also a maybe not so successful football team. Its diverse economy and extensive regeneration plans ensure that the property market will remain vibrant, making it a smart choice for both short-term and long-term investments.
4. Birmingham: A Fast-Growing City with High Demand
As the UK’s second-largest city, Birmingham is often considered a safe bet for property investment. At the heart of the UK’s transport network, with excellent connectivity to London and other major cities, this is set to further improve due to the introduction of HS2. Birmingham’s diverse economy includes sectors like finance, education, and healthcare, driving demand for housing.
Average rental yield: 5-6%
Capital growth: 5-7% annually
Key areas: Digbeth, Jewellery Quarter, Edgbaston, and City Centre
With a growing population, strong rental demand, and significant investment in regeneration projects, Birmingham offers excellent potential for both capital growth and rental yields.
5. Nottingham: Affordable with Strong Rental Yields
Nottingham is often overlooked but has started gaining attention from investors seeking high yields at a lower entry price. Known for its student population and affordable housing, Nottingham offers competitive returns compared to more saturated markets like London or Oxford.
Average rental yield: 6-7%
Capital growth: 3-5% annually
Key areas: The Meadows, Beeston, Hockley, and City Centre
Nottingham is a highly affordable city, making it attractive to first-time investors or those looking to diversify their portfolio. The city has a high concentration of students and young professionals, ensuring consistent rental demand and strong returns.
6. Sheffield: Up-and-Coming Property Market
Sheffield is known for its affordability, making it appealing for investors seeking properties that offer good value for money. With strong ties to the manufacturing and education sectors, Sheffield’s property market is on the rise.
Average rental yield: 5-6%
Capital growth: 4-5% annually
Key areas: Kelham Island, City Centre, Ecclesall Road, and Crookes
Sheffield has seen ongoing regeneration projects, and its affordable property prices offer a strong opportunity for capital growth in the coming years.
7. London: Long-Term Capital Appreciation
As mentioned above, London, while offering lower rental yields due to high property prices, remains a top choice for long-term capital growth. The city’s global status ensures strong demand for property, particularly in prime areas. However, the yields are often lower than in regional cities, especially for buy-to-let investors.
Average rental yield: 2-4%
Capital growth: 3-7% annually (depending on the area)
Key areas: East London (Stratford, Hackney), South London (Croydon, Peckham), and emerging suburbs
London’s property market can be volatile, and the high entry costs may be a barrier for some investors. However, the potential for long-term appreciation remains one of the highest in the UK, particularly in up-and-coming neighbourhoods such as Stratford, Peckham and Wembley, which now have better transport links to 'The City'.
8. Glasgow: Affordable and Growing Market in Scotland
Glasgow is Scotland’s largest city and offers a great balance of affordability and high rental yields. Its strong education sector, combined with a growing job market, attracts students and young professionals, creating sustained demand for rental properties.
Average rental yield: 6-7%
Capital growth: 3-5% annually
Key areas: West End, Finnieston, City Centre, and East End
Glasgow's property market is undergoing significant redevelopment, and with affordable prices compared to other UK cities, it represents an attractive option for investors looking for high yields at a lower cost.
That Curve Ball: other potentials to consider
Belfast: Moving on from a troubled past
Belfast has a growing rental market driven by a young population, professionals, and students. With property prices remaining affordable compared to other UK cities (average house price sitting around £211K), Belfast offers strong yields and growth potential, with a shortage of housing supply, driving rental prices upward.
Average rental yield: 6.11%
Key Areas: Saltwater Square, Cathedral Quarter. Linen Quarter, Titanic Quarter, Queen's Quarter, Stranmillis
With a newly opened Grand Central Station severing as a hub for the Greater Belfast area and beyond, transport links have been vastly improved. Inward investment and regeneration projects are on the rise. Added to this, the rental market in both Belfast and Northern Ireland have experienced rising rents across various property types, contributing to competitive returns for buy-to-let investors.
Stirling: Historic, scenic with a thriving student scene
Stirling has been recognised as one of the UK's top ten locations for buy-to-let investment, making it a promising option for high rental returns. This is supported by a combination of relatively affordable property prices and strong rental demand driven by local markets, students from Stirling University, and commuting professionals.
Average rental yield: 7.5%
Key Areas: Bridge of Allan, Causewayhead, Bannockburn, Stirling City Centre
Average monthly rents range from around £569 for a one-bedroom property to over £1,500 for larger homes. Stirling has quick rail links to Glasgow and Edinburgh and is the ideal location to explore the rest of Scotland.
Conclusion: Where to Invest for the Best Returns?
Choosing the right location for property investment depends on your strategy—whether you're seeking high rental yields or long-term capital appreciation. Northern cities like Manchester, Liverpool, and Leeds offer some of the highest yields in the country, driven by strong demand from students and young professionals. Birmingham and Nottingham also provide a mix of rental income and growth potential, while London remains a long-term bet for capital appreciation despite lower yields.
Ultimately, the best UK property investment location will depend on your budget, risk tolerance, and investment goals. Regional cities offer high yields and growth prospects, while London and other southern cities may provide more stable, long-term capital growth. A knowledge of the locality, while not essential, can prove very useful in determining what is or is not a 'good' deal. Researching local market trends and consulting with property experts can help you make an informed decision tailored to your financial objectives. Also, by joining property community groups such as PropFundrs can help you access the knowledge you need from local property professionals.
If you are interested in finding out more about any of the information mentioned above, why not contact us here at PropFundrs either by booking a call with David (link below) or reaching out to us directly at Support@PropFundrs.com
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