Manchester leads rental yields while London sees strong growth

Property investors in Manchester are reaping the highest rental yields in England and Wales with average annual returns of 6.35%, research reveals.

According to an analysis of government data by Cohab, the North West hub benefits from a vibrant student community and an influx of young professionals drawn to its thriving job market and cultural scene.

The landlord software provider places Merthyr Tydfil in Wales in second place with yields of 6.28%.

Portsmouth secures third place at 6.21%, while Newcastle (6.02%) and Salford (5.91%) complete the top five.

BTL offers opportunities

The firm’s chief executive and founder, Saveli Kotz, said: “Despite the government’s best efforts, the buy to let sector continues to offer an abundance of opportunity for bricks and mortar investors and not only are there a wealth of areas boasting very strong yields in the current market, but we’ve also seen healthy yield growth over the last year, particularly across the London market.

“Manchester has certainly been one success story highlighting how investment and job creation can drive prosperity across the rental market, but for the nation’s landlords, the ability to maximise their investment remains imperative.”

London boroughs show growth

In London, traditionally known for modest yields, some boroughs are experiencing notable improvements.

The data shows Westminster leading with a 1.36% year-on-year increase, bringing yields to 4.38%.

Kensington and Chelsea follow with a 1.08% rise to 3.88%.

Beyond these prestigious areas, Islington (0.74%), Hammersmith and Fulham (0.73%), Brent (0.71%) and Hackney (0.66%) rank among the top 10 for yield growth, with London claiming six spots.

Wales also shines outside the capital, with Merthyr Tydfil boosting yields by 0.89% to 6.28%, Newport rising 0.71% to 4.90% and Torfaen improving by 0.57% to 5.28%.