Understanding UK Rental Yields: Where to Find the Best Returns

 Investing in UK property remains one of the most reliable and profitable ventures in the real estate market. One of the most critical metrics savvy investors use to measure the profitability of a rental property is rental yield. But what exactly are UK rental yields, and where can you find the best rental returns in the UK?

In this blog, we’ll break down what rental yields are, how they are calculated, and most importantly, highlight UK locations offering the highest rental yields in 2025. Whether you're a first-time investor or looking to expand your portfolio, understanding rental yields is essential to make informed and profitable decisions.

What is Rental Yield?

Rental yield refers to the annual rental income from a property as a percentage of its purchase price. It’s a key indicator for property investors to assess the return on investment (ROI).

How to Calculate Rental Yield

The formula is simple:

Rental Yield (%) = (Annual Rental Income / Property Purchase Price) x 100

For example, if you buy a property for £150,000 and earn £9,000 annually in rental income, the rental yield would be:

(9,000 / 150,000) x 100 = 6%

There are two types of rental yields:

  • Gross rental yield – based only on purchase price and rental income.

  • Net rental yield – accounts for expenses such as maintenance, insurance, and management fees.

Why Rental Yield Matters for Property Investors

High rental yields generally indicate better cash flow, especially in areas where property values are stable or rising. Investors looking for buy-to-let opportunities in the UK often prioritise rental yield over capital appreciation, especially when building passive income.

Key benefits of focusing on rental yield:

  • Steady income stream.

  • Better ROI for rental-focused portfolios.

  • Helps assess location profitability.

  • Essential for mortgage affordability calculations.

What is a Good Rental Yield in the UK?

A good rental yield in the UK typically ranges between 5% and 8%. However, this can vary depending on location, property type, and tenant demand.

  • 4-5%: Common in London and Southern England.

  • 5-6%: Average in commuter towns and smaller cities.

  • 6-8%+: Considered excellent, usually found in Northern cities and emerging markets.

Best UK Cities for High Rental Yields in 2025

If you’re looking to maximise your return, location is everything. Here are the top-performing UK cities for rental yields right now.

1. Liverpool – A Consistent Top Performer

Average rental yield: 7% - 9%

Liverpool has long been a hotspot for investors due to its affordable property prices and strong tenant demand. Areas like L7 (Edge Hill) and L1 (City Centre) consistently offer some of the highest yields in the UK.

Why invest in Liverpool?

  • Strong student population.

  • Robust local economy.

  • Regeneration projects like Liverpool Waters.

2. Manchester – The Northern Powerhouse

Average rental yield: 6% - 8%

Manchester continues to attract young professionals and students, boosting demand for rental accommodation. Suburbs like Salford, Fallowfield, and Ancoats are especially popular.

Investment highlights:

  • HS2 rail connectivity.

  • Booming tech and media sectors.

  • High demand for quality rental housing.

3. Glasgow – Scotland’s Rental Yield Capital

Average rental yield: 6% - 8%

With affordable house prices and high rental demand from students and young professionals, Glasgow offers excellent returns.

Top areas for rental yield in Glasgow:

  • G3 (Finnieston, Yorkhill)

  • G11 (Partick)

  • G42 (Govanhill)

4. Nottingham – A Hidden Gem

Average rental yield: 6% - 7.5%

Nottingham’s student population from two major universities contributes to its strong rental market. Areas like NG7 (Forest Fields) and NG1 (City Centre) offer attractive yields.

Why Nottingham?

  • Strong job market.

  • University rental demand.

  • Regeneration in city centre.

5. Leeds – Yorkshire’s Buy-to-Let Hotspot

Average rental yield: 5.5% - 7%

Leeds has a strong local economy and a growing demand for rental properties. The LS6 (Headingley) and LS3 (Woodhouse) postcodes are in high demand due to their proximity to universities.

Investment Pros:

  • Thriving job market.

  • Massive student population.

  • Transport and infrastructure improvements.

Upcoming Areas for Future Growth

Investors should also consider emerging UK property hotspots where rental yields are on the rise due to regeneration and improved transport links:

  • Sunderland – Yields exceeding 8% in some areas.

  • Hull – Affordable properties with solid tenant demand.

  • Bradford – Major development projects driving future returns.

  • Sheffield – Growing student population and business investments.

How to Maximise Your Rental Yield

To boost rental income and improve yield, consider the following strategies:

1. Furnish Your Property

Furnished rentals often attract higher rent, especially in student and professional markets.

2. Choose the Right Tenants

Reliable tenants reduce void periods and maintenance costs.

3. Invest in HMO Properties

Houses in Multiple Occupation (HMOs) can offer significantly higher yields due to multiple rent streams.

4. Keep Up with Maintenance

Well-maintained properties command better rent and retain long-term tenants.

5. Use Professional Letting Services

Property management agencies like VR Property Gateway ensure rent is maximised and your property is tenanted efficiently.

Conclusion: Where to Find the Best Rental Returns in the UK

Understanding and leveraging UK rental yields is crucial for smart property investment. Cities like Liverpool, Manchester, Glasgow, Nottingham, and Leeds consistently offer some of the best rental returns in the UK.

Before investing, always consider:

  • Local rental demand.

  • Property condition and type.

  • Long-term area development potential.

  • Legal and tax implications of buy-to-let.

For expert advice and access to high-yield buy-to-let opportunities across the UK, trust VR Property Gateway. Our team specialises in finding high-yield UK properties and delivering end-to-end investment solutions.

Book Your Property Consultation Today! 

 Dr. Vibha Mahajan today.

 Office18, Ninian Crescent, Lenzie, G66 3JR, Glasgow, Uk Call us today at +44 7737 523825

 Book an appointment online at vrpropertygateway

Disclaimer: This information is provided for informational purposes only and does not constitute legal, financial, or Property advice. Please consult a qualified professional for advice tailored to your specific business situation.

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